In 2018 Rest member Mark McVeigh filed a suit in the Federal Court against the superfund alleging the trustee violated The Corporations Act 2001 by failing to provide information related to climate change business risks and any plans to address those risks.  

Around 12% of Rest's Australian portfolio is made up of energy companies including BHP, Woodside Petroleum, Oil Search and Santos. 

Later in 2018 the case was amended to allege the fund's trustee failed to act with care, skill and diligence when investing for McVeigh, and failed to act in his best interests, by not properly considering the risks climate change poses to the fund's investments. 

At the time Rest told Mark that climate change was one of many ESG risks that its investment managers might take into account.

McVeigh sought declarations from the court to establish Rest's trustee breached its duty. The claim did not allege financial loss.

With the trial expected to kick off today, Rest has agreed to settle, and in a statement acknowledged the catastrophic risks of climate change and would subsequently implement a long-term objective to achieve net-zero carbon emissions for the fund by 2050. 

"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," Mc Veigh said.   

Australia's peak financial regulators, APRA and ASIC, as well as the Reserve Bank of Australia, have warned businesses need to take the foreseeable risks of climate change seriously. 

Equity Generation Lawyers principal and director David Barnden noted it was the first time a major Australian super fund had agreed to settle litigation about the material financial risk of climate change and what needs to be done to protect members.

"The implications of this case are far-reaching for investors and for the climate," he said. 

"The 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." 

It is one of several legal proceedings in the Federal Court relating to climate change risks. 

A 23-year-old plaintiff who holds Australian government bonds is suing the federal government, alleging her investment will be impacted by increased exposure to stranded assets and legal actions. 

The plaintiff is arguing the Australian Office of Financial Management CEO is breaching their public duties. 

Legal firm Allens has warned the case is a stepping stone towards more commercially focussed climate change disclosure class actions against both corporations and directors responsible.