On November 2, 2020, the parties reached a settlement where the Australian pension fund agreed to incorporate climate change financial risks in its investments and implement a net-zero by 2050 carbon footprint goal. More on the settlement below.
An Australian pension fund member filed suit against the Retail Employees Superannuation Trust (REST) alleging that the fund violated the Corporations Act 2001 by failing to provide information related to climate change business risks and any plans to address those risks. The case was filed in the Federal Court of Australia in July 2018.
The plaintiff, Mark McVeigh has contributed to REST since 2013. Under the Corporations Act 2001, super fund beneficiaries are entitled to request information that they need to make an informed decision about the management and financial condition of the fund. The plaintiff requested information from REST regarding the: “(a) knowledge of REST’s Climate Change Business Risks; (b) opinion of Climate Change, the Physical Risks, the Transition Risks and REST’s Climate Change Business Risks; (c) actions responding to REST’s Climate Change Business Risks; and (d) compliance with its obligations under the Corporations Act and other law with respect to REST’s Climate Change Business Risks.” The first complaint alleges that the information provided by REST did not fulfill its obligations and thus seeks declaratory relief that REST violated the Corporations Act by failing to disclose the requested information and an injunction requiring REST to provide that information. In the alternative, plaintiff seeks a declaration and injunction in equitable jurisdiction.
In September 2018 plaintiff filed an amended complaint, alleging, in addition to the claims listed above, that REST has violated the Superannuation Industry (Supervision) Act 1993 (SIS Act). The SIS Act requires trustees to act with care, skill, and diligence, and to perform their duties and exercise their powers in the best interests of their beneficiaries. The amended complaint alleges that a prudent superannuation trustee would have, among other things, required its investment managers to provide the type of information that McVeigh requested regarding climate change; and ensure that its processes for managing investments and disclosing climate change business risks to beneficiaries complied with the recommendations of the Task Force on Climate-Related Financial Disclosures.
In January 2019 the court issued an order on plaintiff's application for maximum costs, which is a mechanism to allow individuals bringing cases in the public interest to avoid legal costs. The court concluded that, "the case appears to raise a socially significant issue about the role of superannuation trusts and trustees in the current public controversy about climate change. It is legitimate to describe the Applicant’s litigation as being of a public interest nature." However, the court determined that more information was needed about plaintiff's ability to proceed if his application was denied. The parties later resolved the issue among themselves.
Before the trial was set to begin, the REST reached a settlement with the plaintiff and set out the details of the settlement in a press release. REST acknowledged that "Climate change is a material, direct and current financial risk to the superannuation fund across many risk categories, including investment, market, reputational, strategic, governance and third-party risks." To address this risk, Rest agreed to implement a net-zero carbon footprint by 2050 goal for the fund, to measure, monitor and report climate progress in line with the Task Force on Climate-related Disclosures, to ensure investee climate disclosure, and to publicly disclose portfolio holdings, among other commitments.