ASIC commences its first greenwashing court proceeding

On 28 February 2023, the Australian Securities and Investment Commission (ASIC) released an announcement stating that it has launched its first proceeding in the Federal Court against Mercer Superannuation (Australia) Ltd (Mercer) for allegedly ‘making misleading statements regarding the sustainable nature of some of its superannuation investment options’.

Greenwashing has become a growing concern, as consumers are becoming more conscious of their environmental impact and are seeking products that have sustainable and ethical credentials. This contextual development has made ASIC reinforce its disclosure standards on sustainability-related claims and its recent focus on greenwashing matters. ASIC has issued over $140,000 in infringement notices in relation to greenwashing offences, which include:

• an infringement notice issued to Tlou Energy Ltd (Tlou);[1]
• three infringement notices issued to Vanguard Investing Australia Ltd (Vanguard);[2]
• an infringement notice issued to Diversa Trustees Ltd (Diversa);[3] and
• an infringement notice issued to Black Mountain Energy Ltd (BME).[4]

Read more here in my January article

In the case of Mercer, 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.”

It is alleged that Mercer made statements on its website about seven of their “Sustainable Plus” investment options. Mercer marketed these investment options as suitable for members who “are deeply committed to sustainability“ on the basis that they excluded investments in companies involved in carbon intensive fossil fuels like thermal coal, alcohol and gambling.

ASIC alleges that in spite of the representations made about the ‘Sustainable Plus’ investment options, Mercer had investments in industries that it had said were excluded from its portfolio. The investments included:

• 15 companies involved in the extraction, or sale of, carbon intensive fossil fuels
• 15 companies involved in the production of alcohol and
• 19 companies involved in gambling

ASIC has claimed that Mercer by its conduct made false and misleading statements to the market and engaged in conduct likely to mislead the public.

It will be interesting to see how this pans out once the date for the first case management hearing is scheduled by the Court.

With increased pressure to elevate ethical and sustainable practices, organisations are under much closer scrutiny. Regulators are on high alert, keeping a watchful eye on companies claiming to embrace these types of practices. It is crucial for organisations to be accurate and have reasonable grounds to support their sustainability claims and demonstrate their commitment to Environmental, Social and Governance policies.

Gadens can assist to evaluate, substantiate, validate, and manage these risks for your business.

For further details on ASIC’s first court proceeding against Mercer see here.

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Authored by: 
Matthew Bode, Partner
Munkh-Erdene Saruul, Paralegal

[1] Australian Securities & Investments Commission, 22-294MR ASIC acts against greenwashing by energy company (March 2023)

[2] Australian Securities & Investments Commission, 22-336MR ASIC issues infringement notices against investment manager for greenwashing (March 2023)

[3] Australian Securities & Investments Commission, 22-379MR ASIC issues infringement notice against superannuation trustee for greenwashing (March 2023)

[4] Australian Securities & Investments Commission, 23-001MR ASIC issues infringement notices to energy company for greenwashing (March 2023)