- The settlement this week of Mr McVeigh’s proceeding against REST has underlined management of climate risk and TCFD-aligned disclosure as growing issues for institutional investors.
- Other recent developments include:
- a further post-approval challenge to a coal mine, asserting that new expert evidence regarding climate change impacts on the Great Barrier Reef should be taken into account to revoke the approval decision; and
- prosecution for import of synthetic greenhouse gas where a single offence attracted an agreed penalty of $500,000.
McVeigh v Retail Employees Superannuation Pty Ltd
REST has settled the proceeding brought by Mr McVeigh over its climate change risk identification, management and disclosures. The proceeding, which was the first of its kind brought in an Australian court, was dismissed by orders made by consent in the Federal Court on 2 November 2020 ahead of a scheduled three-day trial hearing.
Details of the settlement were not made public however REST published a statement which acknowledged that climate change ‘could lead to catastrophic economic and social consequences and is an important concern of REST’s members’. REST also stated that it is important to identify the financial risks of climate change across many categories and, where possible, quantify these in respect of individual assets and the fund’s portfolio.
The statement also records Mr McVeigh’s acknowledgement that REST will ‘implement a long-term objective to achieve a net zero carbon footprint for the fund by 2050’. Other superannuation funds which have made similar ‘net zero’ commitments in recent months include Aware (previously First State Super), HESTA, Cbus and UniSuper.
Although the case has limited formal effect given the Court was not required to rule on any of the substantive issues, it provides further momentum for superannuation trustees to actively engage with their investee companies on climate disclosures, risk management and shareholder resolutions.
Request for revocation of Adani Coal Mine EPBC approval
Two young Queenslanders have recently requested that the Commonwealth Minister for the Environment exercise power under the Environment Protection and Biodiversity Conservation Act 1999 to revoke the 2015 approval of the Carmichael Coal Mine and Rail Infrastructure Project.
The request was accompanied by three expert reports which were presented as independent scientific evidence that the approved mine will have a significant impact on the Great Barrier Reef that was not identified in assessing the mine, thus enlivening the Minister’s discretion to revoke the approval. In particular, the request relies on the reports as demonstrating a causal link seeking to address matters raised in the former Minister’s reasons for approval given in 2015, including addressing the scope of coal mining in the region as a reasonably foreseeable consequence of the Carmichael mine, emissions from thermal coal and addressing market substitution, and identifying impacts of climate change on the Great Barrier Reef including by reference to three coral bleaching events since 2015.
Third party requests for revocation of approvals are rare, and are rarely successful. However, the request highlights the question of when, and what, new evidence or analysis of climate impacts may be relevant in reconsidering existing project approvals or conditions. The request being pursued by two young Queenslanders is also consistent with the trend through a number of recent claims and challenges brought by young people in Australia and worldwide.
Significant civil penalty for unlicensed import of synthetic greenhouse gas
A very different judgement recently issued in Minister for the Environment v ACN 089 171 415 Pty Ltd  FCA 1557, where the Court confirmed a civil penalty that had been agreed by the parties in relation to the import of 5 cylinders of a synthetic greenhouse gas without a licence under the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 (Cth).
The company admitted the contravention and the Court’s orders were made on the basis of an agreed statement of facts and joint submissions, awarding a pecuniary penalty of AUD$500,000. The case is consistent with the trend towards broadening of regulatory engagement with climate change to consider interrelated matters.
The Court ultimately confirmed the parties’ proposed penalty, but gave fairly detailed consideration to the appropriateness of the agreed amount in the circumstances, in particular noting it was the first civil penalty imposed under the relevant provision of the Act. While the amount imported was considered a material contribution to Australia’s importation of greenhouse gases in a proportionate sense and was serious, the Court also commented that aspects of the joint submissions regarding the harm likely to be caused by the contraventions due to climate change ‘may be an overly dramatic description’, including given the contemporary context of other carbon emitting activities in Australia.
By Heidi Asten, Partner and Melanie Debenham, Partner. With thanks to Libby Plajzer.