Corporate regulator ASIC has landed its first greenwashing case with Mercer Superannuation ordered by the Federal Court to pay a $11.3 million penalty.
The fund admitted it made misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.
"This was ASIC’s first greenwashing case brought before the Federal Court; a landmark case both for ASIC and for the financial services industry," said ASIC deputy chair Sarah Court.
"It demonstrates the importance of making accurate ESG claims to investors and potential investors."
The court found Mercer made misleading statements on its website about seven Sustainable Plus investment options offered by the Mercer Super Trust.
These marketed the options as suitable for members who "are deeply committed to sustainability" because they excluded investments in companies involved in carbon intensive fossil fuels such as thermal coal. Exclusions were also stated to apply to companies involved in alcohol production and gambling.
The court found those who took up the Sustainable Plus options had investments in companies involved in industries the website statements said were excluded:
- 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).
In the Federal Court, Justice Horan said the contraventions admitted by Mercer are serious.
"They arose from failures by Mercer to implement adequate systems to ensure that ESG claims in relation to its superannuation products were accurate, and to monitor and enforce the application of any sustainability exclusions associated with such ESG claims," the judge said.
"It is vital that consumers in the financial services industry can have confidence in ESG claims made by providers of financial products and services. As is the case in many other industries, consumers may place great importance on ESG considerations when making investment decisions.
"Any misrepresentations in relation to ESG policies or practices associated with financial products or services, whether as an aspect of 'greenwashing' practices or otherwise, undermines that confidence to the detriment of consumers and the industry generally."
Mercer Super has agreed to pay ASIC’s costs.
ASIC has two other cases before the Federal Court concerning greenwashing, with action against Vanguard Investments Australia and Active Super
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