Managing $42 billion on behalf of more than two million members, REST is one of Australia’s largest super funds. But our recent Risky Business report found that REST doesn’t disclose any evidence that it is managing climate risk. That means two million Australians are being kept in the dark about how REST takes climate change risks into account when deciding how to invest those members’ retirement savings.
What has REST said about climate risk?
Nothing! There’s not one mention of climate change anywhere on the fund’s website, in its product disclosure statements, annual reports, governance documents or anywhere else in the public domain. The fund has not signed on to any climate-related commitments, like the Montreal or Paris pledges, nor joined any sustainable investor groups.
In response to member questions on the issue, REST has stated “we appreciate that Environmental, Social and Governance (ESG) factors can impact on long run investment returns.” But this approach seems contrary to guidance from the industry regulator and lawyers.
According to the Australian Prudential Regulation Authority (APRA), climate risks are “distinctly financial in nature” and ““the days of viewing climate change within a purely ethical, environmental or long-term frame have passed.”
Similarly, a June 2017 legal opinion from Noel Hutley SC and James Mack, commissioned by Market Forces, concluded:
“It is the treatment of climate change as a financial risk (as distinct from the treatment of climate change as a environmental, social or governance issue) that trustee directors ought consider in an appropriate case when fulfilling the requirements imposed by the [Superannuation Industry (Supervision) Act].”
Tell REST to improve their climate risk disclosure today!
What is REST invested in?
It is currently impossible to examine REST’s investments. The funds provides no information about which specific assets it invests members’ retirement savings in. According to REST’s Product Disclosure Statement (1 March 2017), the Core Strategy option portfolio included 19% Australian shares, 29% International shares, 11% Property and 6% Infrastructure investments.
According to the S&P Dow Jones Indices Carbon Scorecard (May 2017), the S&P/ASX All Australian 50 index “had the highest level of embedded emissions in proven and probable fossil fuel reserves and the greatest percentage of revenues derived from coal-based activities, making it the most exposed index to potential stranded assets”. REST has not imposed any restrictions on emissions-intensive investments.
Climate risk is by no means limited to listed equities. According to the TCFD, “the development and use of emerging technologies such as renewable energy, battery storage and energy efficiency” represents a transition risk to some infrastructure assets. Furthermore, the TCFD advises that both infrastructure and property assets are vulnerable to “event driven (acute) or longer-term shifts (chronic) in climate patterns”.
How have they voted?
REST voted against a 2015 resolution lodged by ANZ shareholders, with support from Market Forces. The resolution asked ANZ to:
- Provide more information about how much it is exposed to carbon intensive industries
- Set public targets for reducing their exposure to carbon intensive industries
- Make it easier for shareholders to lodge resolutions
In our 2016 Digging Deeper research, REST was found to be largely supportive of executive bonus packages that explicitly incentivised expanding or replenishing fossil fuels reserves.
What else do we know?
REST is the industry super fund for retail and hospitality workers, and generally has quite a young member base. This means many of REST’s members are likely to face the worst impacts of climate change. The membership demographics and temporary nature of many retail and hospitality jobs also suggest REST’s members may be generally more disengaged with their super fund than others.
We need REST members to be as vocal as possible in raising their climate concerns with the fund! Take action today – use the form above to tell REST to lift their game on climate risk.