Today’s article on the front page of the Australian Financial Review reports that coal miners are under ‘Green attack’. Coal Miners such as BHP and Rio Tinto are not happy about the approach, the latter describing it as ‘economic vandalism’. 

The article:

http://www.afr.com/p/national/business_outraged_by_anti_coal_campaign_O09SRiOhlOTYeUJZr9CkXO

What is the real issue here for investors? Capital loss? Poor returns? Whether now or in the near future, the future of the Australian coal industry is at stake. Responsible investors need not be concerned, as their portfolios screen out these types of risky investments.

Investors who choose their investments according to responsible or ‘ethical’ guidelines would have minimal portfolio exposure to any impacts, as coal miners wouldn’t feature in their portfolios. Why? Firstly, they may be opposed to coal mining. Secondly, their portfolio would have minimal exposure to companies which are seen as ‘risky’. In this case, risk is measured by issues that could materially impact a company’s share price/ profitability.

These material issues are things such as environmental damage, potential for litigation, labour standards, legislative impact, and so on. Unfortunately for the coal industry, it faces risks in a range of these areas – mining fossil fuel in a world trying to lessen its carbon emissions just isn’t a long term proposition. So in fact, you could be a climate change sceptic, but still make the ‘responsible’ investment decision, because you can see that the material issues for coal miners are just too great.

To learn more about investing responsibly, see our page: http://www.justinvest.net.au/responsible-investment/