An Australian superannuation fund is being singled out for possible legal action over a failure to engage with its members on the risks of sudden carbon price movements within its portfolio.
The Asset Owners Disclosure Project (AODP) has sought legal advice from law firm Baker & McKenzie on how superannuation funds might be breaching their fiduciary duty to beneficiaries.
The intention is to take the fund to the Superannuation Complaints Tribunal. Funds overseas are also being targeted for potential action by the AODP.
The proposed action was revealed by John Hewson, former Liberal leader and chair of the Asset Owners Disclosure Project, in a speech to the Fund Executives Association annual dinner in Sydney last week.
Hewson told the audience that the risk posed to their funds by the global financial crisis was “tiny” compared to the risk from mispricing companies which relied heavily on carbon producing assets for revenue.
The threat follows a year after the AODP and the Australian Youth Climate Coalition launched a campaign pressuring funds to reveal more about their fossil fuel based investments and to balance their portfolios with cleaner investments.
John Connor, board member of the AODP and chief executive of the Climate Institute, revealed many of these member requests for information were being ignored or fobbed off.
“There is a direct duty of care to beneficiaries, they are entitled to ask questions of their fund.”
Of the legal action, he said: “There are plenty of obvious candidates at this stage, but we have not settled on a particular one. We are dead serious about trying to get better disclosure from super funds.”