The 25-year old from Brisbane’s successful court action against one of Australia’s biggest super funds over their handling of climate change, has forced it to commit to net-zero emissions for its investments by 2050.

In 2018, McVeigh sued Rest, his superannuation fund, in the Federal Court after it failed to provide him with information on how it was managing the risks of climate change.

McVeigh alleged Rest had breached the Superannuation Industry Act and the Corporations Act by failing to manage those risks — which could include fossil fuel companies plummeting in value or infrastructure being damaged by extreme weather.

The law requires trustees of super funds to act with care, skill and diligence to act in the best interest of members — including managing material risks to its investment portfolio.

In an 11th hour settlement reached this week while the case was adjourned, Rest agreed its trustees have a duty to manage the financial risks of climate change.

Because the case was settled out of court, the outcome doesn’t carry the same weight as a legal precedent decided in court. But McVeigh’s lawyer, David Barnden, head of Equity Generation Lawyers, said the case still sets an important precedent globally.

“This outcome should represent a significant shift in the market’s willingness to tackle climate risk—a shift which should set a clear precedent for the industry in Australia, and also pension funds around the world,” Barnden said.

In a statement, Rest outlined the agreement it made with McVeigh, and said: “The superannuation industry is a cornerstone of the Australian economy—an economy that is exposed to the financial, physical and transition impacts associated with climate change.”

Historic agreement

In the signed agreement, Rest said that “climate change is a material, direct and current financial risk to the superannuation fund”.

Rest went further and agreed to manage its investments so they are responsible for net-zero greenhouse gas emissions by 2050.

It also agreed to immediately begin testing its investment strategies against various climate change scenarios, publicly disclose all its holdings, and advocate for companies it invests in to comply with the goals of the Paris Agreement, which aims to stop global warming at 1.5C.

It was the first time an Australian superannuation fund had been sued for not doing enough on climate change.

“Today’s settlement gives me, and Rest’s almost two million members, the reassurance that we need to know that our retirement savings will be invested responsibly in the face of the climate crisis,” McVeigh said.

His lawyer, Barnden said the implications were far-reaching for investors, and for the climate.

“This marks the first time a major Australian superfund has agreed to settle litigation about the material financial risk of climate change and what needs to be done to protect members. It is clear that the bucks stops with board members, and managing climate risk cannot be delegated away,” he said.

In its statement, Rest 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.”

In another case, Barnden is representing all young people around the world in a class action against the Australian environment minister, alleging she has failed in her duty of care to protect young people from climate change.

Barnden is also representing 23-year-old Katta O’Donnell, who is suing the Australian Government for failing to disclose the risks that climate change could have on government bonds.

Action picking up pace

The news comes amid a wave of developments around the world, indicating increased action on climate change.

Over the past month, China, Japan and South Korea have all announced goals of reaching net-zero greenhouse gas emissions at around the middle of this century. Those three countries buy 75 per cent of Australia’s exported thermal coal and nearly 60 per cent of our exported gas.

Last week, Australia’s third biggest bank confirmed it was ceasing its lending to thermal coal by 2030.

In 2019, the ABC reported on a leaked ANZ memo showing that it would slash its lending to thermal coal by about $700 billion by 2024.

– ABC / national science, technology and environment reporter Michael Slezak