Australia’s corporate watchdog, the Australian Securities and Investments Commission (ASIC), has reaffirmed its commitment to combat misleading environmental claims made by investment funds in 2024, following legal action against three funds in 2023.
Deputy Chair Sarah Court, speaking with the Financial Times, emphasized the regulator’s determination to take action against funds marketing themselves as “net zero” or “carbon neutral” when their investments fail to align with those claims, describing such conduct as “misleading and deceptive.”
In the previous year, ASIC initiated legal proceedings against Mercer Superannuation, Vanguard Investments Australia, and Active Super for alleged greenwashing. The case against Mercer, which marketed its Sustainable Plus fund as excluding fossil fuel companies, resulted in a proposed A$11.3 million ($6 million) penalty pending court approval. Notably, the fund was accused of investing in carbon-intensive stocks, including Glencore and BHP, as well as prohibited gambling and alcohol stocks.
ASIC’s broader allegations extend to various funds and companies failing to adhere to their ethical promises of excluding investments in fossil fuels, tobacco, gambling, and, in some cases, Russian investments. The regulator possesses the authority to directly fine companies and has already imposed penalties for misleading claims, including those made in Facebook posts.
Court stressed the importance of companies complying with ethical fund marketing laws, asserting that failure to do so poses challenges to market integrity and competition. She emphasized that claims made by funds attract investors seeking ethical investments, relying on these claims without the capacity to verify their accuracy.
ASIC, which prioritized addressing greenwashing in 2023, published guidelines in June and has heightened monitoring efforts. The regulator’s increased enforcement aligns with a global trend, with regulators such as the UK’s Financial Conduct Authority and the US Securities & Exchange Commission taking action against alleged misstatements by funds. DWS, a German asset manager owned by Deutsche Bank, settled greenwashing charges with the SEC for $19 million in September.
Australia’s commitment to combating greenwashing is evident in the government’s allocation of A$4.3 million in the 2023 budget to fund ASIC’s crackdown. Additionally, the country is set to introduce mandatory climate reporting for companies starting in 2024. ASIC’s proactive stance positions Australia as a focal point in the global effort to scrutinize and enforce environmental and ethical claims made by investment funds.
