ASIC launches first court action against greenwashing

The Australian Securities and Investment Commission has launched its first court proceedings against Mercer Superannuation for its greenwashing conduct.

According to ASIC, Mercer Superannuation has allegedly made misleading statements about the sustainable nature and characteristics of some of its superannuation investments.

Sarah Court, deputy chair at ASIC said this is the first time ASIC has taken an Australian entity to court regarding alleged greenwashing conduct.

She said, “It reflects our continuing efforts to ensure sustainability-related claims made by financial institutions are accurate.”

Action against greenwashing is one of ASIC’s 2023 enforcement priorities and this proceeding is its 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 alleged that 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, companies involved in the extraction or sale of carbon intensive fossil fuels, involved production of alcohol, and involved in gambling.

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

Court said, “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.”

ASIC has issued over $140,000 in infringement notices in response to concerns about alleged greenwashing, which include Tlou Energy Limited, Vanguard Investments Australia, Diversa Trustees Limited and Black Mountain Energy.

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.

Last year, ASIC chair Joseph Longo said the commission was cracking down on greenwashing within organisations.