REST Facing Legal Battle Amidst Climate Risk

  • Oct 03, 2018 AEST
  • Team Kalkine
REST Facing Legal Battle Amidst Climate Risk

Over claims breached in its trustee duties by failing to properly factor in the climate change-related risks into its investment decisions, industry super fund REST is facing a new federal court legal battle. For many retail workers REST is the default industry super fund and one of the council workers accused REST of breaching superannuation law by failing to act in the best interests. David Barnden, Mr. McVeigh's lawyer from Environmental Justice Australia said that the fresh allegations formed an important amendment which alleges REST to have failed to discharge its duties as a trustee to act with "care, skill and diligence" in relation to the impact of climate change, to a legal claim lodged in July, in which REST was accused of not disclosing substantial information about climate risk.

A new amended statement argues that climate change posed material or major risks to many of the super fund's investments. Mr. Barnden was heard saying that it was a significant test case for how asset owners and investors around the world dealt with climate change and said the legal action would be watched closely by the superannuation fund community. Providing certainty for investors and consumers, it called on the federal government to develop a national energy policy.   

Mr. McVeigh case exploring legal questions on investment risk and climate change was picked up by Environmental Justice Australia. The first claim requested for REST to disclose information to make an informed decision about his superannuation, including the opinion, fund's knowledge and actions on climate risk. To disclose how climate change may impact their businesses, companies listed around the world are coming under pressure from regulators and investors. Where few companies were disclosing climate change as a material risk found by the Australian Securities and Investments Commission (ASIC).

To adopt a more sophisticated approach to climate risk, the report calls on Australia's $2.6 trillion super industry. Following the damaging exposures about the super sector out of the Hayne royal commission, REST was subject to a series of findings by counsel assisting including charging members premiums for life insurance they could never claim and suspects that it may have breached its duties.

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