Most (82 per cent) of the country’s largest superannuation funds have provided inadequate or no tangible evidence they have considered climate risk in their investment portfolios, according to Market Forces.
Market Forces analyst, Daniel Gocher, said Australian regulators had made it clear that super funds needed to assess climate risk.
“Since this has largely fallen on deaf ears, it’s no surprise that trustees now find themselves open to legal action for a dereliction of basic fiduciary duty,” he said.
“…It is extraordinary that more than 80 per cent of Australia’s super funds have still failed to disclose how they are managing an issue that APRA [Australian Prudential Regulation Authority] has singled out as an immediate, material, financial risk.”
The firm commissioned a memorandum of opinion from Noel Hutley SC and James Mack seeing the breadth of super fund trustees duties and climate risk. The memorandum said the failure by super funds put trustee directors “at risk of breaching their duty to members, and as such, vulnerable to legal action”.
“Billions of dollars of Australian retirement savings are at stake from the physical and transition risks of climate change. The funds that are considering climate risk would be doing right by their members to disclose it,” Gocher said.
“As for the funds that are ignoring climate risk – if the warning signs from regulators haven’t jolted trustees into action, perhaps the realisation of legal liability will.”
Market Forces’ latest analysis also found that:
The $75 billion fund has gained exposure to decarbonisation solutions in its first listed equities impact investment.
The superannuation fund is expanding its investment exposure to industrial property through a $1 billion partnership with Barings, a global investment manager.
AustralianSuper has usurped the Future Fund as the biggest Australian asset owner, jumping from 43rd to 36th place globally, according to an annual study by the Thinking Ahead Institute.
IFM Investors, the global institutional asset manager owned by superannuation funds, has signed a memorandum of understanding with the UK government to invest £10 billion by 2027.
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