The 23-year-old taking a $50bn super fund to court over climate change
Most Australians want to see action on climate change. But the vast majority is unaware that the banks, superannuation and insurance funds that manage our money almost exclusively invest in coal, oil and gas and highly polluting companies.
How the trillions of dollars Australians invest in banks and superannuation funds is managed is vitally important to the transition to a clean energy economy. By making sure our savings are kept out of companies driving dangerous climate change, we can play a huge role in decarbonising our economy.
Shareholders, investors and customers are using their power to hold these institutions to account for damaging our climate and driving them away from investing in polluting fossil fuels towards investments that don’t harm our environment.
In 2017, 23-year-old Mark McVeigh, took the trustee of his retirement fund, the Retail Employees Superannuation Trust (REST), to Federal Court, seeking information about what the trustees knew about the impact of climate change on its investments and what they were doing to address them.
The case was brought under the Corporations Act that says super fund beneficiaries can ask for any information they need in order to make an informed decision about the management and financial condition of the fund.
This was the first time a super fund member has taken a fund to court over lack of information about climate change risk.
Initially the case sought only to have the super fund disclose information on climate risk. But in 2018, McVeigh filed a new claim alleging REST had breached its obligations to protect his retirement savings from the financial devastation that will flow from climate change.
In addition to reviewing the fund’s investment strategy through a climate lens, McVeigh alleges REST’s trustee should have performed additional acts.
The first is to comply with recommendations from the Task Force on Climate-related Financial Disclosures’s (TCFD) including stress-testing investment portfolios based on limiting global warming to well below 2°C, in line with the Paris Agreement.
The second is to seek information from investment managers about the exposure of investments to climate risks and how those risks are being managed.
The case is a world first – the first time a court case sought to clarify legal duties around climate risk for super funds that control trillions of dollars of retirement savings and it could have global ramifications.
With almost $50 billion under management, REST is one of Australia’s largest asset owners and is in the top 150 pension funds in the world. If the court agrees that REST has breached its fiduciary duties, it could change the way major asset owners address climate change risks when managing other people’s money and could pave the way for further litigation.