The Australian Securities & Investments Commission (ASIC), Australia’s corporate, markets, and financial services regulator, announced that it has launched a court action against superannuation fund Active Super, alleging that the fund made misleading ESG-related claims to members, by investing in companies in sectors that it had claimed to eliminate from its holdings.
In a statement released by ASIC announcing the commencement of the civil penalty proceedings in the Federal Court, the regulator outlined statements made by Active Super on its website and in Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. More media postings claiming that the fund “eliminate(s) investments that pose too great a risk to the environment and community,” and providing tobacco, nuclear weapons, oil tar sands and gambling as examples. Active Super also said that it had added Russia to its list of excluded countries following the invasion of Ukraine.
According to the ASIC allegations, however, the fund held 28 holdings which exposed members to these areas between February 2021 and June 2023, including holdings in casino operator Skycity Entertainment Group, tobacco company Amcor, and Russian oil and gas companies Gazprom and Rosneft.
The regulator added that Active Super continued to have holdings in Russian securities as of June 30, 2023, despite making representations in May 2022 that it would stop investments in Russian companies.
ASIC Deputy Chair Sarah Court said:
“There is much competition among super funds for new members, and we know that funds seek to attract members with promises their investments will not be exposed to certain industries. When making these claims super funds must have evidence to back their claims and ensure they are not promising exclusions that they cannot guarantee.”
The announcement marks ASIC’s third greenwashing penalty proceedings launch so far this year, following the commencement of cases against Marsh McLennan company Mercer Superannuation and Vanguard Investments Australia. The cases follow a statement last year by ASIC Chair Joseph Longo, warning providers of investment funds and financial products that the regulator was watching out for misleading sustainability claims, and that it was providing guidance for fund managers and issuers to keep clear of greenwashing.
In a statement following the ASIC announcement, Active Super said:
“Active Super has co-operated with ASIC’s investigation and welcomes increased scrutiny on Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. More disclosure standards as being good for members, the super industry and the community. As the matter is before the courts we are unable to comment further.”
ASIC said that it is seeking declarations, pecuniary penalties, adverse publicity orders and an injunction against Active Super from the Court.