Australian regulator targets net zero greenwashing

Follows IPO examination of one company’s statements

September 17, 2021

The Australian Securities & Investments Commission (ASIC) has warned it will take action against companies it believes are making misleading claims regarding their net zero efforts.

The financial regulator has already intervened in an energy company’s initial public offering (IPO) in order to seek clarification on its statements.

The company in question has not been named.

“We continue to monitor net zero statements in both fundraising documents and marketing generally,” said ASIC in a statement. “We will take action where warranted.

“Where there are no reasonable grounds to underpin a net zero statement that is predictive in nature, the disclosure may be misleading.”

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As a result of the intervention, the undisclosed company made various changes to its statements. It also provided further disclosure on how it intended to reach its targets.

In July, the Australian Financial Review (AFR) revealed gas explorer Tamboran Resources had been scrutinised by the ASIC and that its commitments in its IPO prospectus were targeted.

Joel Riddle, CEO of Tamboran Resources, was quoted by the AFR saying that the gas firm had been “tested quite considerably by ASIC on our business plan and our vision around being net zero”.

On the level of scrutiny, Riddle told the AFR: “When I look at the other top 13 [Australian oil and gas] companies I don’t think any of them have gone through the level of scrutiny we have gone through… so that is coming. That is coming for a lot of these players.”

Financial regulators are increasingly scrutinising sustainability claims made by corporates and investors.

Last month, German and US financial regulators launched investigations into asset manager DWS over concerns that it had made misleading statements about its use of sustainability criteria.

Yesterday, a new standard for net zero for the oil and gas sector was published by the Institutional Investors Group on Climate Change. It is backed by global investors with more than $10trn in assets between them.

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Last Updated: 17 September 2021