The Australian Securities & Investments Commission (ASIC) Australia’s corporate, markets, and financial services regulator, announced today the launch of its first court action against greenwashing, initiating proceedings against Marsh McLennan company Mercer Superannuation for allegedly making false claims about some of its sustainable investment options.
According to a statement released by ASIC announcing the commencement of the civil penalty proceedings in the Federal Court, the regulator is alleging that Mercer made claims on its website about seven ‘Sustainable Plus’ investment options, including investment exclusions applied to involved in carbon intensive fossil fuels like thermal coal, as well as companies involved in alcohol production and gambling. The regulator notes, however, that investors who chose these options had investments in several fossil fuel companies, including those producing coal such as BHP Group and Glencore, as well as in 15 companies involved in alcohol production and 19 companies involved in gambling.
ASIC said that it alleges that by doing so, “Mercer made false and misleading statements and engaged in conduct that could mislead the public.”
Sarah Court, ASIC Deputy Chair, said:
“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.”
The proceedings against Mercer follows 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.
Since that time, the regulator has issued infringement notices in response to concerns about alleged greenwashing to several companies and investment firms, including Vanguard Investments Australia and Black Mountain Energy. The Mercer case marks its first greenwashing court action.
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 said that in addition to seeking declarations and pecuniary penalties from the court, it is also asking for injunctions preventing Mercer from continuing to make any of the alleged misleading statements on its website, and a requirement for Mercer to publicize any contraventions found by the court.
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