ASIC wins greenwashing claims again Vanguard

The Australian Securities and Investment Commission (ASIC) said on Thursday it’s won its first greenwashing civil penalty against Vanguard Investment Australia.

ASIC said the federal court ruled the investment company “contravened the law by making misleading claims about certain environmental, social and governance (ESG) exclusionary screens applied to investments in a Vanguard index fund.”

According to ASIC, Vanguard admitted to misrepresenting the public and making false or misleading claims. 

Justice O’Bryan [pdf] found that Vanguard broke the ASIC Act multiple times when it made false or misleading claims about the ESG exclusionary screens that were applied to the Vanguard Ethically Conscious Global Aggregate Bond Index Fund.

These included 12 product disclosure statements, a media release, statements published on Vanguard’s website, a Finance News Network interview on YouTube and a presentation at a Finance News Network Fund Manager Event which was published online.

A further hearing is set to take place on the first of August to decide the appropriate penalty. 

ASIC deputy chair Sarah Court said, “By Vanguard’s own admission, it misled investors on a number of its claims.

"In this case, Vanguard promised its investors and potential investors that the product would be screened to exclude bond issuers with significant business activities in certain industries, including fossil fuels when this was not always the case.

“As ASIC’s first greenwashing court outcome, the case shows our commitment to taking on misleading marketing and greenwashing claims made by companies in the financial services industry. 

“It sends a strong message to companies making sustainable investment claims that they need to reflect the true position,” Court said. 

Last February saw ASIC taking on Mercer Superannuation for similar greenwashing misconduct.

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

At the time Court said it was the first time the commission had taken an Australian entity to court regarding alleged greenwashing conduct.

Back in 2022, ASIC chair Joseph Longo publicly claimed the commission was clamping down on greenwashing practices across businesses.