Legal woes continue for super fund

Industry superannuation fund Rest is facing renewed scrutiny over its responsible investment practices after one of its members filed an updated Federal Court claim alleging the fund has failed to act in his best interests.

In July, Rest member Mark McVeigh filed an original claim against the $50 billion super fund alleging it failed to provide information that would enable him to make an informed decision as to whether Rest directors were complying with their legal obligations.

McVeigh, backed by Environmental Justice Australia, has now updated the claim to allege Rest has failed to act in his best interests by not properly considering the risks climate change poses to its investments.

"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," McVeigh said.

"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."

McVeigh is arguing that Rest's trustee has failed to act with care, skill and diligence when investing on behalf of its members and is seeking a decision from the Federal Court as to whether climate risks should be accounted for when asset owners manager other people's money.

The claim further argues that in order for its trustees to truly fulfil their duties, Rest must seek information from investment managers about climate risks and comply with the Task Force on Climate-related Financial Disclosures.

As APRA is the regulator of super funds, McVeigh's new claim quotes a speech delivered by APRA executive board member Geoff Summerhayes in 2017 in which he said climate change risks are "foreseeable, material and actionable now."

Environmental Justice Australia principal lawyer David Barnden said: "Like superannuation funds in Australia, pension funds and sovereign wealth funds across the world must act with care, skill and diligence. They also must act in the best interest of beneficiaries."

"This is an important test case on how asset owners should deal with climate change risks."

At the time of the initial Federal Court action, Rest told Financial Standard it conducts extensive due diligence before appointing an investment manager in order to assess their ability to invest sustainably.

"We require our investment managers to consider a range of factors, including ESG risks, when selecting investments in their portfolios and when exercising voting rights," Rest said.

The fund is currently recruiting for a responsible investment manager to join its investment team to develop, implement and manage a responsible investment strategy.

A key responsibility of the role is to ensure that Rest rates highly in relevant responsible investing industry rankings, the job advert reads.

The next hearing in the matter will be held in Sydney on Tuesday, October 9.

Read more: APRAEnvironmental Justice AustraliaDavid BarndenFinancial StandardGeoff SummerhayesMark McVeigh
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