AUSTRALIA: Greenwashing crackdown – ASIC sues superannuation giant in landmark case
By Matthew Watts, Rebecca Mangos and Bernard Sia
For the first time, the Australian Securities and Investments Commission (ASIC) has launched court action against a major superannuation trustee for allegedly making misleading statements about the sustainable nature and characteristics of some of its investment products (known as “greenwashing”). ASIC claims the corporate pension fund misled consumers by investing in companies involved with the alcohol, gambling and fossil fuel sectors, contrary to the fund’s marketed sustainable and ethical credentials.
The landmark case reflects the corporate regulator’s commitment to ramping up surveillance and enforcement action against inaccurate, exaggerated or unsubstantiated claims about certain attributes of financial products, as pledged in ASIC’s 2023 Enforcement Priorities.
In a statement addressing the civil proceedings, ASIC emphasised it will continue to clamp down on misleading financial product marketing due to “increased demand for sustainability-related financial products, and with that comes the growing risk of misleading marketing and greenwashing.”
It is also the first time that ASIC has commenced court action after legislative amendments, arising from the Financial Services Royal Commission, widening the remit of ASIC’s powers to take action on a broader range of superannuation trustee conduct.
While this case marks an Australia-first, the issue has firmly cemented itself as a priority area on a global scale, in tandem with growing concerns about climate change and its impact. A myriad of new laws and regulations in various offshore jurisdictions has led to a significant spike in greenwashing claims within the last 12 months, including some class actions seen in United States courts.
ASIC’s action is anticipated to garner attention throughout the superannuation industry and corporate Australia more broadly, being a significant step towards the effective regulation of greenwashing not yet widely seen in its offshore counterparts. As the scrutinisation of greenwashing continues to be in the spotlight, industry participants should closely monitor developments and be reviewing their current practices against relevant regulatory guidelines.