July 26, 2018
On Tuesday, July 24, 23-year-old Mark McVeigh, represented by Environment Justice Australia, filed a lawsuit against Australia’s $50 billion Retail Employees Superannuation Trust (REST) superannuation fund. According to the plaintiff, REST has not provided him with adequate information about how the fund manages climate-related financial risks, and this suit seeks to force such disclosure.
Steven Feit, Staff Attorney at the Center for International Environmental Law (CIEL), issued the following statement:
This kind of lawsuit is not unsurprising; in fact, we predicted it. Pension funds have obligations to their beneficiaries, including the duty to monitor their investments and to preserve fund capital over the long-term. Climate change poses significant financial risks to investors, especially those who have significant holdings in fossil fuel companies. This risk is particularly acute for pension funds, which have extremely long investing horizons and are generally risk-averse. Failing to monitor fund portfolios for climate-related financial risk is risky both financially and legally, and opens the door for cases like this in Australia, the United States, and elsewhere.
Pension fund trustees and other fiduciaries are now officially on notice: this case is one of the first, but it will certainly not be the last. Failing to take climate-related financial risk into consideration when managing fund assets exposes a fund to unnecessary financial risk, and may be a violation of fiduciary duties to beneficiaries.