ASIC brings 1st court action alleging ‘greenwashing’
The corporate regulator is commencing civil penalty proceedings against alleged greenwashing conduct, involving the supposed making of misleading statements and engagement in conduct that could mislead the public about sustainability.
The Australian Securities and Investments Commission (ASIC) has launched proceedings in the Federal Court of Australia against Mercer Superannuation (Australia) Limited for allegedly making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.
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The corporate regulator is alleging that Mercer made statements on its website about seven “Sustainable Plus” investment options offered by the Mercer Super Trust (of which Mercer is the trustee), marketing such options as suitable for members who “are deeply committed to sustainability” because they excluded investments in companies involved in carbon-intensive fossil fuels, alcohol production and gambling, ASIC said.
However, the regulator alleged in a statement, members who took up the Sustainable Plus options had investments in companies involved in industries Mercer’s website had said were excluded, such as 15 companies involved in the extraction or sale of carbon-intensive fossil fuels, 15 companies involved in the production of alcohol, and 19 companies involved in gambling.
As listed by ASIC, these companies included: AGL Energy Ltd, BHP Group Ltd, Heineken Holding NV, Treasury Wine Estates Ltd, Crown Resorts Limited, and Tabcorp Holdings Limited.
In doing so, the regulator submitted, “Mercer made false and misleading statements and engaged in conduct that could mislead the public”.
The news follows a recent interview with Greenpeace Australia general counsel Katrina Bullock, who noted that “gone are the days where greenwashing will go unchecked”.
Lawyers Weekly has also recently published commentary detailing how lawyers can respond to regulatory crackdowns on greenwashing and advise clients in the face of increased accountability for ESG.
The regulator is seeking declarations and pecuniary penalties from the Federal Court, as well as injunctions preventing Mercer from continuing to make any of the alleged misleading statements on its website, and orders requiring Mercer to publicise any contraventions found by the court.
In addition to being the first greenwashing proceedings brought by the regulator, the launching of these proceedings is also the first time that ASIC has brought court action following the Financial Services Royal Commission-inspired legislative amendments, which bolstered the regulator’s capacity to take action regarding a broader range of superannuation trustee conduct.
Speaking about the proceedings, ASIC deputy chair Sarah Court said the bringing of these first proceedings against alleged greenwashing reflects the regulator’s “continuing efforts to ensure sustainability-related claims made by financial institutions are accurate”.
“There is increased demand for sustainability-related financial products, and with that comes the growing risk of misleading marketing and greenwashing. If financial products make sustainable investment claims to investors and potential investors, they need to reflect the true position,” she said.
“If investments in certain industries like fossil fuels are said to be excluded, this promise must be upheld.”
ASIC has previously issued over $140,000 in infringement notices in response to concerns about alleged greenwashing, including against Tlou Energy Limited, Vanguard Investments Australia, Diversa Trustees Limited, and Black Mountain Energy.
The court has yet to schedule a date for the first case management hearing.