ASIC launches first greenwashing court action

A superannuation fund offering sustainable investments that allegedly invested money in fossil fuel companies, gambling entities and alcohol makers is facing court action by the market regulator for alleged greenwashing. 

The Australian Securities and Investments Commission (ASIC) is launching its first court action against alleged greenwashing conduct.

Mercer Superannuation (Australia) Limited allegedly made misleading statements about the “sustainable nature and characteristics of some of its superannuation investment options”, according to a statement from the regulator.

“This is the first time ASIC has taken an Australian entity to court regarding alleged greenwashing conduct, and it reflects our continuing efforts to ensure sustainability-related claims made by financial institutions are accurate,” said ASIC deputy chair Sarah Court, following the regulator’s Federal Court filing.

ASIC alleges that Mercer’s ‘Sustainable Plus’ were marketed to people who were ‘deeply committed to sustainability’, but on closer inspection, their funds were invested in industries supposedly excluded, including:

• 15 companies involved in the extraction or sale of carbon intensive fossil fuels (including AGL Energy, BHP Group Ltd, Glencore and Whitehaven Coal);
• 15 companies involved in the production of alcohol (including Budweiser Brewing Company APAC Ltd, Carlsberg, Heineken Holding and Treasury Wine Estates); and
• 19 companies involved in gambling (including Aristocrat Leisure, Caesar’s Entertainment, Crown Resorts and Tabcorp Holdings).

In doing so, ASIC alleges Mercer made false and misleading statements and engaged in conduct that could mislead the public.

“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. If investments in certain industries like fossil fuels are said to be excluded, this promise must be upheld,” said Court.

ASIC has issued over $140,000 in infringement notices in response to concerns about alleged greenwashing, with action against greenwashing constituting one of ASIC’s 2023 Enforcement Priorities. 

“This proceeding is also the first time ASIC has commenced court action after legislative amendments, arising from the Financial Services Royal Commission, enhanced ASIC’s powers to take action regarding a broader range of superannuation trustee conduct,” the ASIC statement said.

ASIC is seeking declarations and pecuniary penalties from the 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.