ASIC has launched its first court action against alleged greenwashing conduct, commencing civil penalty proceedings in the Federal Court against Mercer Superannuation (Australia) Limited (Mercer) for allegedly making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.
ASIC Deputy Chair Sarah Court said, '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.'
ASIC alleges Mercer made statements on its website about seven 'Sustainable Plus' investment options offered by the Mercer Super Trust, of which Mercer is the trustee. These statements marketed the Sustainable Plus options as suitable for members who 'are deeply committed to sustainability' because they excluded investments in companies involved in carbon intensive fossil fuels like thermal coal. Exclusions were also stated to apply to companies involved in alcohol production and gambling.
However, ASIC alleges members who took up the Sustainable Plus options had investments in companies involved in industries the website statements said were excluded. For example:
- 15 companies involved in the extraction or sale of carbon intensive fossil fuels (including AGL Energy Ltd, BHP Group Ltd, Glencore PLC and Whitehaven Coal Ltd);
- 15 companies involved in the production of alcohol (including Budweiser Brewing Company APAC Ltd, Carlsberg AS, Heineken Holding NV and Treasury Wine Estates Ltd); and
- 19 companies involved in gambling (including Aristocrat Leisure Limited, Caesar's Entertainment Inc, Crown Resorts Limited and Tabcorp Holdings Limited).
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,' concluded Ms Court.
ASIC has issued over $140,000 in infringement notices in response to concerns about alleged greenwashing, which include Tlou Energy Limited (22-294MR), Vanguard Investments Australia (22-336MR), Diversa Trustees Limited (22-379MR) and Black Mountain Energy (23-001MR).
Action against greenwashing is one of ASIC's 2023 Enforcement Priorities and this proceeding is our first court action in this regard.
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.
ASIC is seeking declarations and pecuniary penalties from the Court. ASIC also seeks 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.
The date for the first case management hearing is yet to be scheduled by the Court.
Background
Sustainable Plus Investment Options are available to members of the Mercer Super Trust through the 'Select-your-own' investment options, which allows members to blend options to suit their needs and are marketed 'for potential members that are deeply committed to sustainability', comprise a higher proportion of sustainability-themed assets and are subject to additional investment exclusions of companies in certain sectors.
ASIC's Information Sheet 271 (INFO 271) provides information for responsible entities of managed funds and super fund trustees about how to avoid greenwashing when offering or promoting sustainability-related or ethical products and investments.
