◼ FINANCE Bloomberg Businessweek November 25, 201926
on the planet and the economy,” says McVeigh,
who works as an ecologist for a local government.
Rest says climate change is just one of a variety
of factors it must consider when investing the sav-
ings of its roughly 2 million members, who include
store clerks and shopkeepers, according to court
filings. McVeigh started contributing to Rest when
he worked at a grocery store as a student.
Australia’s pension industry—home to the
world’s fourth-largest retirement savings pool at
A$2.9 trillion—is watching the case closely, partic-
ularly because many funds must also meet legis-
lated minimum return targets. “Looking after the
best financial interests of our members requires
us to be conscious of the risks but not exclude a
whole segment of the economy that’s going to be
very meaningful for a period of time,” says Ian
Patrick, chief investment officer at Sunsuper Pty
Ltd., which manages A$70 billion.
Australia’s mandatory retirement savings sys-
tem, known as superannuation, is meant to relieve
pressure on the public purse as the nation’s pop-
ulation ages, lives longer, and requires a steady
income stream to survive. Money employers and
individuals contribute goes into the funds. Much of
the industry must aim to return 3.5% above infla-
tion over a decade. But returns aside, McVeigh
and other savers want to see their nest eggs last
as long as possible in an uncertain environment.
Companies are beginning to act—a new study by
State Street Global Advisors in the U.S. found that
fiduciary duty is one of the main “push factors”
for a financial institution to adopt environmental,
social, and governance principles.
Australian retirement fund managers, including
Sunsuper and Health Employees Superannuation
Trust Australia (Hesta), have employed respon-
sible investment teams to integrate ESG factors
into their portfolios. They’ve joined global inves-
tor initiatives such as the United Nations-backed
Principles for Responsible Investment, and
they’ve used their sizable holdings in companies
such as BHP Group Ltd. and Glencore Plc to agi-
tate for change within them.
Whether a fund should simply divest from cer-
tain companies that generate greenhouse gases
or use their ownership stakes to push for reform
is frequently discussed in the industry. Mary
Delahunty, who’s in charge of improving Hesta’s
responsible investment practices, says selling isn’t
always a prudent option. “As soon as you remove
capital, they don’t have to have a conversation
with you anymore,” she says.
While activism is rising and some inves-
tors and banks are shying away from financing60%40200● Shareofmanaged
assetsrunwith
strategiesconsidering
environmental,social,
andgovernanceissues
◼ 2014
◼ 2018Canada
Australia &
New ZealandEuropeU.S.environmentally damaging projects, the Australian
government is going the other way. Prime Minister
Scott Morrison, a staunch supporter of the coal
mining industry, is considering new laws aimed at
limiting the influence of activists such as the group
Market Forces, which has pushed banks and insur-
ers to say they’ll get out of coal projects.
In addition to improving environmental dis-
closures, Rest recently appointed a responsi-
ble investment manager. In June it took control
of a wind farm in Western Australia from a UBS
GroupAGunit.Thefundalsosaysit soughttomeet
withMcVeightodiscusshisconcerns.“Specific
climate-related issues which we engage with our
investment managers on include carbon foot-
printing, stranded assets, climate-related scenario
analysis, and exposure to lower carbon assets,”
a spokesperson said in an emailed statement.
Stranded assets refers to the idea that some compa-
nies have property such as oil reserves that can’t be
tapped if changes are made to slow global warming.
Michael Gerrard, a professor of environmen-
tal, climate change, and energy law at Columbia,
says “success in litigation breeds imitation.” If
McVeigh wins, others may take a close look at
his strategy. “People are so desperate at the fail-
ure of governments to act adequately on climate
change that they’re looking for litigation targets,”
Gerrardsays.�MatthewBurgessTHE BOTTOM LINE Money managers have a duty to protect the
financial interests of their investors. A lawsuit asks if that includes
protecting against the risk of climate change.● Wall Street is already dipping a toe into sports
betting as wagers become legal in more placesStocks, Bonds, and
Maybe Basketball
The line between trading and gambling has always
been fuzzy. So now that many U.S. states have legal-
ized sports betting, following a 2018 Supreme Court
ruling, it’s natural to wonder if Wall Street will start
looking for a piece of the action.
A few firms already are. At least one is actu-
ally making bets, much as a hedge fund trades
stocks. Susquehanna International Group LLP, a