Universities Superannuation Scheme, London, will exclude tobacco and certain other companies that are "financially unsuitable" for the £68 billion ($83.9 billion) pension fund.
The fund's in-house money manager, USS Investment Management, for the first time set out its position on exclusions in a news release Monday. The announcement followed a review of the long-term financial factors associated with investing in certain sectors.
USS will divest from tobacco corporations, companies that derive 25% of revenues from thermal coal mining and organizations with links to cluster munitions, white phosphorus and land mines.
The fund's direct and indirect exposures to the sectors will be examined and investments excluded or sold over the next two years, the fund said Monday. USS invested £190 million in tobacco company stocks as of April 30, the spokeswoman said. USS does not currently invest in thermal coal companies directly, she added.
"This is a major development for us and one that will balance both keeping the financial promises made to hundreds of thousands of members in the higher education sector, with investing in a responsible way over the long-term," Simon Pilcher, CEO of USS Investment Management, said in the release. USS Investment Management runs 75% of the fund's assets.
"As the majority of USS's assets are invested directly by USS Investment Management, we will have a great deal more control over this process than other pension schemes," Mr. Pilcher said. "And where we work with external managers, we will work diligently with them to implement our conclusions via their products."