Industry superannuation fund, Rest has agreed to settle litigation brought by its member, Mark McVeigh, creating a climate risk fiduciary precedent.
In 2017, McVeigh filed legal action against the fund for breaching fiduciary duties by failing to adequately handle climate change risk.
Today, Rest issued a statement that said it would take further steps to ensure its investment managers took active steps to consider, measure, and manage financial risks posed by climate change and other relevant environmental, social, and governance (ESG) risks.
It noted that it would use “a variety of mechanisms” to access and, if necessary, take steps to improve the compliance of its investment managers.
Rest said climate change was a “material, direct, and current financial risk” to super funds across risk categories such as investment, market, reputational, strategic, governance, and third-party risks.
Rest said it considered that it was important to actively identify and manage these issues, and continue to develop systems, policies and processes to ensure that the financial risks or climate change were:
“Rest’s policy requires that the management of climate change risks also involves the disclosure to members of those risks, as well as the systems, policies and procedures maintained by the trustee to address those risks,” it said.
“Rest agrees with Mr McVeigh to continue to develop its management processes for dealing with the financial risks of climate change on behalf of its members.”
The statement said that McVeigh acknowledged and supported Rest’s initiatives to:
The research house has offered a silver lining after super fund returns saw the end of a five-month streak last month.
A survey of almost 6,000 fund members has identified weakening retirement confidence, particularly among those under 55 years of age, signalling an opportunity for super funds to better engage with members on their retirement journey.
The funds have confirmed the signing of a successor fund transfer deed, moving closer to creating a new $29 billion entity.
A number of measures, including super on Paid Parental Leave, funding to recover unpaid super, and frameworks to encourage investment in the energy transition, have been welcomed by the superannuation industry.
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