First Court Case Alleging Greenwashing Filed by ASIC
Australian Securities & Investments Commission (ASIC) has initiated its first legal action against purported greenwashing behaviour, having initiated civil penalty proceedings in the Federal Court against Mercer Superannuation (Australia) Limited (Mercer) over allegations that the company made deceptive assertions regarding the environmentally sustainable properties of certain investment options available within its superannuation offerings.
Sarah Court, the vice chair of ASIC, said, "This is the first time ASIC has taken an Australian entity to court for alleged greenwashing. It shows that we are still working to make sure that financial institutions' claims about sustainability are true."
As per ASIC's claim, Mercer Superannuation (Australia) Limited (Mercer), which functions as the trustee of the Mercer Super Trust, made representations on its website regarding seven investment options branded as 'Sustainable Plus.' These statements were advertised as appropriate for members who possess a significant interest in sustainability due to their exclusion of investments in companies associated with carbon-heavy fossil fuels such as thermal coal as well as companies involved in gambling and alcohol production.
ASIC alleges that members who invested in these options had holdings in companies associated with these excluded industries. For example:
Investments made by members in Sustainable Plus options included holdings in 15 companies engaged in the sale or extraction of carbon-intensive fossil fuels, such as AGL Energy Ltd, Glencore PLC, BHP Group Ltd, and Whitehaven Coal Ltd.
Investments in Sustainable Plus options also included holdings in 15 companies associated with alcohol production, including Carlsberg AS, Heineken Holding NV, Budweiser Brewing Company APAC Ltd, and Treasury Wine Estates Ltd.
Additionally, investments made by members in Sustainable Plus options included holdings in 19 companies associated with gambling, such as Caesar’s Entertainment Inc, Crown Resorts Limited, Aristocrat Leisure Limited, and Tabcorp Holdings Limited.
ASIC says that by doing this, Mercer made false and misleading claims and did things that could confuse 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's court action against Mercer marks the first instance of ASIC's exercise of its extended powers to address a wider range of superannuation trustee conduct following legislative amendments in response to the Financial Services Royal Commission.
In its legal action, ASIC seeks both declarations and pecuniary penalties from the Court. Additionally, ASIC is requesting injunctions to prevent Mercer from making any further alleged misleading statements on its website, as well as court-ordered publicity of any contraventions found by the court. As of now, a date for the initial case management hearing has yet to be set by the Court.