ASIC has started its first lawsuit against greenwashing. ASIC alleges that a superannuation trustee offered “sustainable” investment options that misleadingly claimed to exclude investments in fossil fuels, alcohol and gambling. 

Allegations: ASIC alleged that Mercer Superannuation (Australia) Limited stated on its website that its 7 Sustainable Plus investment options excluded investments in companies involved in carbon intensive fossil fuels, alcohol production and gambling. However, ASIC alleged that members who took up the Sustainable Plus options had investments in companies involved in these “excluded” industries, eg 

• 15 companies involved in extracting or selling carbon intensive fossil fuels, eg AGL, BHP, Glencore and Whitehaven Coal
• 15 companies involved in producing alcohol, eg Budweiser, Carlsberg, Heineken and Treasury Wine Estates 
• 19 companies involved in gambling, eg Aristocrat, Caesar’s, Crown Resorts and Tabcorp.

Seeking penalties: ASIC is seeking pecuniary penalties, injunctions to stop the misrepresentations, publication orders and declarations from the Federal Court. ASIC alleges that Mercer made false and misleading statements and its conduct could mislead the public. 

Wider powers against superannuation trustees: This is also the first court case ASIC has brought after legislative changes enhancing its powers to pursue a wider range of superannuation trustee conduct.

Tips to avoid greenwashing: Be specific. Give a realistic impression of environmental impact or sustainability. Make your advertisements (especially the headline) consistent with any disclaimers. Use clear, plain language. Only make claims you can prove. Only make claims in an appropriate context. Use current, complete information. Use Wolters Kluwer’s Advertising checklist and practical guide to check whether your marketing material is misleading due to greenwashing or other issues, eg price, comparisons, reviews etc.

More greenwashing cases: Another useful resource available to Wolters Kluwer subscribers is the greenwashing case table. Here’s a partial sneak peek (for those who aren’t currently subscribed):

ACCC’s internet sweep triggers deeper investigations: The ACCC is actively investigating multiple businesses for greenwashing in the packaging, consumer goods, food manufacturing and medical devices sectors. 57% of the 247 businesses reviewed in the ACCC’s greenwashing internet sweep made concerning claims about their environmental credentials or sustainability practices. The ACCC may launch more investigations as it continues to assess the businesses and claims identified in the sweep. The ACCC will ask businesses to substantiate their claims, if it has concerns. The cosmetic, clothing, footwear, food and drink sectors had the highest proportion of concerning claims. Many businesses made vague environmental claims.

“Greenwashing” is the practice of misrepresenting the extent to which a company, product, service or investment strategy is environmentally friendly, sustainable or ethical. It may involve exaggerated claims.

Source: 

• ASIC, ASIC launches first Court proceedings alleging greenwashing, 23-043MR, 28 February 2023
• ACCC, ACCC ‘greenwashing’ internet sweep unearths widespread concerning claims, 17/23, 2 March 2023
• Case examples — Greenwashing — Misleading about environment and ethics at ¶26-700 of our Competition and Consumer Law content.
• Advertising checklist and practical guide at ¶26-008 and ¶26-007.

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Additional resources

• Explore our interactive Misleading conduct case finder at ¶26-1000.
• Check out our guide to corporate ESG reporting in our Company Law content.