ASIC cracks down on “greenwashing”

A recent win by ASIC in the Federal Court of Australia has seen Mercer Financial Advice (Australia) (“Mercer”) ordered to pay the government a $12 million penalty for misleading members as to the sustainability credentials of their products.

The court found Mercer contravened the ASIC Act by making false and misleading statements regarding its sustainable superannuation investment options. Mercer claimed on its website that the Mercer “Sustainable Plus” superannuation investment options were not invested in companies involved in alcohol, gambling or carbon intensive fossil fuels. However, the “Sustainable Plus” options were in fact investing millions of dollars a year in 49 companies involved in those industries, including AGL Group, BHP, Whitehaven Coal, Budweiser Brewing Company, Carlsberg AS, Aristocrat Leisure Ltd, Crown Resorts and Tabcorp Holdings Ltd.

The Court found that Mercer misled investors, touting the super scheme as suitable for members who are “deeply committed to sustainability”.

An enforcement focus of 2023, ASIC has also launched proceedings against Vanguard and Active Super for similar greenwashing claims in relation to their environmental and social credentials. Active Super promoted on their website and across various social media, that they do not invest in gambling, tobacco and oil tar sands. At commencement of the Ukraine war they even claimed they would stop investing in Russian companies. ASIC claims Active Super continued investing in these industries, misleading the public.

ASIC remains focused on stamping our greenwashing and maintains the “enduring antidote to greenwashing is transparency through meaningful disclosure”1.

Companies should be wary of overstating their “green” and ethical credentials. Sustainability is an ever-increasing priority for consumers and can remain a key marketing strategy – however, marketing material and disclosures should be closely reviewed to ensure they accurately reflect the company’s true position and are not vague, misleading or open to misinterpretation. The precedent has been set, with substantial financial and reputational damage at risk.

1 ASIC (10 July 2023)

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