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Mark McVeigh successfully sued his super fund for failing to tell
members how they plan to address the financial risks of global
warming. (ABC News: Michael Slezak) |
Key Points
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A 25-year-old man from Brisbane has successfully sued one of Australia's biggest super funds over its handling of climate change, forcing it to commit to net-zero emissions for its investments by 2050.
In 2018, Mark McVeigh sued Rest, his superannuation fund, in the Federal Court after it failed to provide him with information on how it was managing the risks of climate change.
Mr McVeigh alleged Rest had breached the Superannuation Industry Act and the Corporations Act by failing to manage those risks — which could include fossil fuel companies plummeting in value or infrastructure being damaged by extreme weather.
The law requires trustees of super funds to act with care, skill and diligence to act in the best interest of members — including managing material risks to its investment portfolio.
In an 11th-hour settlement reached on Monday while the case was adjourned, Rest agreed its trustees have a duty to manage the financial risks of climate change.
Because the case was settled out of court, the outcome doesn't carry the same weight as a legal precedent decided in court. But Mr McVeigh's lawyer, David Barnden, head of Equity Generation Lawyers, said the case still sets an important precedent globally.
"This outcome should represent a significant shift in the market's willingness to tackle climate risk — a shift which should set a clear precedent for the industry in Australia, and also pension funds around the world," Mr Barnden said.
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David Barnden from Equity Generation Lawyers. (ABC News: Brendan Esposito) |
"It has not [produced] a clear legal decision by a court which clarifies the obligations and duties of directors under the law," he said.
"However, there is widespread acceptance in the legal and business community that these obligations regarding climate clearly exist."
In a statement, Rest outlined the agreement it made with Mr McVeigh, and said: "The superannuation industry is a cornerstone of the Australian economy — an economy that is exposed to the financial, physical and transition impacts associated with climate change."
An historic agreement
In the statement, Rest said that "climate change is a material, direct and current financial risk to the superannuation fund".
Rest went further and agreed to manage its investments so they would be responsible for net-zero greenhouse gas emissions by 2050.
It also agreed to immediately begin testing its investment strategies against various climate change scenarios, publicly disclose all its holdings and advocate for companies it invests in to comply with the goals of the Paris Agreement, which aims to stop global warming at 1.5C.
The case was the first time an Australian superannuation fund had been sued for not doing enough on climate change.
"Today's settlement gives me, and Rest's almost two million members, the reassurance that we need to know that our retirement savings will be invested responsibly in the face of the climate crisis," said Mr McVeigh.His lawyer, Mr Barnden said the implications were far-reaching for investors, and for the climate.
"This marks the first time a major Australian superfund has agreed to settle litigation about the material financial risk of climate change and what needs to be done to protect members. It is clear that the buck stops with board members, and managing climate risk cannot be delegated away," he said.
In its statement, Rest said: "Rest agrees with Mr McVeigh to continue to develop its management processes for dealing with the financial risks of climate change on behalf of its members."
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Mark McVeigh says the heart of his legal action is about making
super funds transparent with their plans for climate
change. (ABC News: Michael Slezak) |
"The initiatives that rest are now pursuing are ones that one would expect Australian super funds to be doing in any event," he said.
"This brings them into line with a number of other super funds in Australia already doing this."
In another case, Mr Barnden is representing all young people around the world in a class action against the Australian Environment Minister, alleging she has failed in her duty of care to protect young people from climate change.
Mr Barnden is also representing 23-year-old Katta O'Donnell, who is suing the Australian Government for failing to disclose the risks that climate change could have on government bonds.
Action picking up pace
The news comes amid a wave of developments around the world, indicating increased action on climate change.
Over the past month, China, Japan and South Korea have all announced goals of reaching net-zero greenhouse gas emissions at around the middle of this century. Those three countries buy 75 per cent of Australia's exported thermal coal and nearly 60 per cent of our exported gas.
Last week, Australia's third-biggest bank confirmed it was ceasing its lending to thermal coal by 2030.
In 2019, the ABC reported on a leaked ANZ memo showing that it would slash its lending to thermal coal by about $700 billion by 2024.
Links
- (AU) Queensland Teenagers Lodge Legal Action Against Adani Coal Mine To Save Great Barrier Reef
- These Aussie Teens Have Launched A Landmark Climate Case Against The Government. Win Or Lose, It’ll Make A Difference
- (AU) Class Action To Stop Planned Coal Mine Extension Filed By Climate Action-Focused Australian Teenagers
- (AU) Australia Asks UN To Dismiss Torres Strait Islanders' Claim Climate Change Affects Their Human Rights
- (AU) Climate Change Litigation: The Australian Government Gets Sued
- Mark wants to know if his super is protected from climate change. So he's taking his fund to court
- The number of Australians who don't believe in climate change has taken a sharp decline, poll reveals
- A group of investors is trying to shut down this coal company from the inside
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