The case against REST super to set a climate risk precedent

In August 2017, in a world first, 23-year-old Mark McVeigh, represented by Environmental Justice Australia, filed a legal action alleging the trustee of his retirement fund, the Retail Employees Superannuation Trust (REST), breached the fiduciary duties owed to him by failing to adequately consider climate change risks.

McVeigh is unable to access his superannuation until 2055. Climate risks are biting now, and his investment horizon is stretched. The claim does not allege financial loss. McVeigh seeks declarations from the court to establish the trustee breached its duty. He also seeks injunctions to prevent future misconduct.

The unique case has global ramifications. With almost $50 billion under management, REST is one of Australia’s largest asset owners. It is in the top 150 pension funds in the world. A judgment will make law on how a major asset owner should address climate change risks when managing other people’s money.

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 Task Force on Climate-related Financial Disclosures (TCFD) recommendations on disclosure and risk assessment. Notably, the TCFD wants funds to stress-test investment portfolios based on a world that limits warming to well below 2°C, in line with the Paris Agreement.

The second is to seek information from investment managers about investments’ exposure to climate risks and how those risks are being managed.

The case is still ongoing, with McVeigh now represented by David Barnden’s (former EJA lawyer), new law firm.

Read more about the claim in key decisions and documents:

Case update 21 Feb, 2019

On Thursday, 21 February 2019, Ron Merkel QC, instructed by lawyers from Environmental Justice Australia, appeared in the Federal Court of Australia on behalf of Mark McVeigh in a test case on the duties of super funds trustees with respect to climate change.

The Court made orders that allow Mark to make another application to limit any costs he might have to pay in the proceeding.

The new orders follow the 17 January 2019 decision McVeigh v Retail Employees Superannuation Pty Ltd [2009] FCA 14 that dismissed the original application due to insufficient information. Notably, that decision confirmed the public interest nature of the case and stated:

“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.”

REST is also required to file a concise statement responding to Mark’s allegations (effectively a short form defence) by 1 April 2019. The next hearing is scheduled for 9:30am Tuesday, 2 April 2019 at the Federal Court of Australia in Sydney.

I’m concerned the fund isn’t taking climate change seriously when investing my money. The world is already seeing the impacts of global warming. My money should be managed in a way that makes climate change a priority.

Mark McVeigh

Case update 3 October, 2018

Environmental Justice Australia, the legal practice representing 23 year old Mark McVeigh, has filed a new Federal Court claim against the trustee of A$50 billion superannuation fund, REST, for breaching its duties on climate risk.  

The updated claim alleges REST’s trustee failed to act with care, skill and diligence when investing for Mark, and failed to act in his best interests, by not properly considering the risks climate change poses to the fund’s investments.  

This landmark case asks the Federal Court of Australia to find that climate change risks must be taken into account when asset owners like REST manage other people’s money.  

Mark McVeigh, the REST member bringing the claim, said, “I thought my superannuation fund may not be doing enough on climate change. When I asked them for more information they didn’t tell me much, and now they say they have given me all the information they have.”  Read more…

Case update 25 July, 2017

Mark McVeigh, 23, is taking his superannuation fund REST to the Federal Court of Australia, seeking information about what the trustees know about the impact climate change will have on its investments and what they are doing in response to that knowledge.

The Corporations Act says super fund beneficiaries can ask for any information they need to make an informed decision about the management and financial condition of the fund.

This is the first time a super fund member has taken a fund to court over lack of information about climate change risk.

Mark McVeigh, like all working Australians, must contribute money to superannuation, but he is having trouble finding out exactly what is being done to protect his money. Read more…