In the first case of its kind, a pension fund member in Australia has taken their fund to court over a lack of information on what it knows about the impact of climate change on his investments and what it is doing about it.
Mark McVeigh, 23, is taking the Retail Employees Superannuation Trust (REST) to the Federal Court of Australia. He is being supported by lawyers at Environmental Justice Australia.
Commenting on the case, ClientEarth’s Head of Climate Alice Garton said: “This case is being brought in Australia but the principles which underpin it are the same in the UK and we may well see similar cases in this country in the near future.
“Climate change is one of the most significant financial risks to the global economy and will have profound consequences for pension funds and other long-term investments. Pension funds must incorporate climate change risks and opportunities into their investment decision-making process to ensure the future savings of millions of people are protected.
“Many pension fund members like Mark are concerned about climate change issues. They, like all members, have a right to be kept informed about how their pension savings are invested. It is time pension funds are open about what actions they are taking to identify and manage climate-related financial risk so that members can hold their pension funds to account.”
David Barnden, principal lawyer at legal practice Environmental Justice Australia, said: “REST has a poor record of telling members about its actions on climate change. So Mark asked REST to commit to the recommendations of the Task Force on Climate-related Financial Disclosures. REST ignored his request.
“REST has long-term investments in property and infrastructure, as well as in public companies exposed to climate risks. Super fund trustees must consider climate risks and protect their members from the significant impacts of climate change.
“This is an important test case for Australia’s A$2.6 trillion superannuation industry. Super funds own 25% of the total value of all companies listed on the Australian Securities Exchange. These funds and the individuals that control them are critical to the economy’s fast and orderly transition under the Paris Agreement.”
The unprecedented case highlights the legal obligation for pension fund trustees to understand and manage all material financial risks in their investment decision-making process, including the significant and systemic risks presented by climate change.
Pension fund trustees who fail to act in the best interests of plan members can be held accountable.
Garton added: “This litigation should serve as a wake-up call to pension funds who are not adequately communicating their actions on climate change to members. We expect to see more litigation of this type against pension funds who are falling behind in their disclosure and management of climate-related financial risk.”
Alice Garton is an Australian qualified lawyer.