The Australian Securities and Investments Commission (ASIC) has launched its first court action against alleged greenwashing conduct by Mercer Superannuation (Australia) Limited (Mercer).
ASIC alleges that Mercer made false claims about the characteristics of its superannuation investment options, which were marketed as suitable for members committed to sustainability and purportedly excluded investments in businesses engaged in the production of alcohol, gambling, and carbon-intensive fossil fuels.
ASIC alleges that members who took up the Sustainable Plus options had investments in a significant number of companies involved in the excluded industries.
ASIC is asking the court for declaratory and injunctive remedies as well as pecuniary penalties from the court, reflecting its efforts to ensure that sustainability-related claims made by financial institutions are accurate.
Who should be aware of this?
- Financial institutions offering sustainability-related or ethical products and investments, including managed funds and super fund trustees.
- Compliance and risk management teams responsible for ensuring the accuracy and transparency of marketing materials and disclosures.
- Executive leaders and boards responsible for setting strategic priorities and risk management frameworks.
What does the report state?
Mercer is the subject of civil penalty actions brought by ASIC in the Federal Court for allegedly making false and misleading representations and engaging in conduct which may mislead the public.
ASIC alleges certain members who took up the Sustainable Plus options had investments in industries that the website states were excluded, including 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 is seeking declaratory and injunctive relief and pecuniary penalties from the court, as well as injunctions preventing Mercer from continuing to make any alleged misleading statements on its website. ASIC is also seeking orders requiring Mercer to publicise any contraventions found by the court.
What opportunities are there for change?
In order to ensure that marketing materials and disclosures appropriately reflect the true status of their sustainability-related goods and investments, financial institutions should use this as an opportunity to review their disclosure statements.
Further, compliance and risk management teams should review their policies and procedures to ensure they are adequate to prevent greenwashing conduct and that they are being followed.
Executives and boards will need to prioritise sustainability and ethical investments and ensure that risk management frameworks adequately capture and assess ESG risks in a way that mitigates the risk of misleading and deceptive statements or false claims being made.
What can businesses do now?
- Review your marketing materials and disclosures to ensure they accurately reflect the true position of your sustainability-related products and investments.
- Review your policies and procedures to ensure they are adequate to prevent greenwashing conduct and that they are being followed.
- Ensure that risk management frameworks regarding sustainability and ethical investment claims adequately capture and assess disclosure requirements and competition laws.