ASIC cracks down on greenwashing
May 12, 2023
Australia’s financial watchdog has been taking active steps to address greenwashing with 35 interventions in the space of nine months.
In a new report, the Australian Securities and Investments Commission (ASIC) detailed a series of incidents in which it had stepped in to change companies’ behaviour, including altering product descriptions or removing misleading terms or phrases.
Actions included calling out companies for making net-zero statements that did not have a “reasonable basis” or that were factually incorrect. It also addressed inaccurate use of terms such as “carbon neutral”, “clean”, and “green”, and the accuracy of assertions made about sustainable investment terms and processes.
Between 1 July 2022 and 31 March 2023, ASIC’s activity resulted in 23 “corrective disclosure outcomes”, according to the report, as well as 11 infringement notices and one civil penalty being issued.
The interventions saw 14 responsible investment vehicles make changes to their disclosures and one change its name, while nine listed companies agreed to amend documentation or other public information.
In the investment fund space, ASIC highlighted several instances where products labelled as sustainable or similar were not following through on claims. In several cases, this led to asset managers publishing more and clearer information about their investment strategies and approaches to sustainability.
Vanguard was hit with a fine for greenwashing by ASIC in December 2022 after the regulator found it had overstated the use of an investment screen for excluding tobacco-related investments. It imposed a fine on Diversa Trustees, a superannuation fund provider, for similar reasons in December 2022.
In February this year, ASIC launched court action related to greenwashing for the first time, alleging that Mercer Superannuation (Australia) had overstated the extent of investment screens related to investments in carbon-intensive industries, the production of alcohol, and the gambling industry.
At a recent conference hosted by the Responsible Investment Association Australasia, ASIC’s deputy chair Karen Chester underscored the importance of addressing greenwashing.
“Greenwashing distorts the information that a current or prospective investor might need to make informed investment decisions,” Chester said. “In doing so it results in capital misallocation. Greenwashing corrodes investor confidence in the market for sustainability-related financial products and corporate strategies.”
However, she also acknowledged that addressing greenwashing on a case-by-case basis was not sustainable. Alongside its current work, Chester said ASIC was working with the Australian Treasury to “support increased transparency and trust across the system” through policy measures.
Last Updated: 12 May 2023