The Australian Securities & Investments Commission (ASIC) has launched its first court action against alleged greenwashing conduct, commencing civil penalty proceedings in the Federal Court against Mercer Superannuation (Australia) for allegedly making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.

ASIC deputy chair Sarah Court said: “This is the first time ASIC has taken an Australian entity to court regarding alleged greenwashing conduct, and it reflects our continuing efforts to ensure sustainability-related claims made by financial institutions are accurate.”

ASIC alleges 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 including 15 companies involved in the extraction or sale of carbon intensive fossil fuels (including AGL Energy Ltd, BHP Group Ltd, Glencore PLC and Whitehaven Coal Ltd); 15 companies involved in the production of alcohol (including Budweiser Brewing Company APAC Ltd, Carlsberg AS, Heineken Holding NV and Treasury Wine Estates Ltd); and 19 companies involved in gambling (including Aristocrat Leisure Limited, Caesar’s Entertainment Inc, Crown Resorts Limited and Tabcorp Holdings Limited).

“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 Court.

Action against greenwashing is one of ASIC’s 2023 Enforcement Priorities and this proceeding is its first court action in this regard.

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