Australia Intensifies Crackdown on Greenwashing in Investment Sector

Mark Landers
By Mark Landers
An image showing Australian regulators, depicted as figures in business attire, scrutinizing greenwashing practices in the financial sector.

Australia is getting tough on greenwashing. The Australian Securities and Investments Commission (ASIC) has made a promise to keep fighting against false green claims by investment funds. Last year, they took legal action against three funds for this reason.

Sarah Court, the deputy chair of ASIC, made it clear. She said, “It is misleading and deceptive conduct. We are trying to send messages to the market that we won’t tolerate this.” This shows ASIC’s strong stance against dishonesty.

In 2023, ASIC targeted three funds: Mercer Superannuation, Vanguard Investments Australia, and Active Super. They accused these funds of greenwashing. This means they were saying their investments were environmentally friendly, like “net-zero” or “carbon-neutral,” but they weren’t really.

One big case was against Mercer. Their Sustainable Plus fund said it wouldn’t invest in fossil fuels, gambling, or alcohol companies. But it did.

ASIC found they invested in big carbon-producing companies like Glencore and BHP. Mercer hasn’t commented because the case is still going on. Vanguard also didn’t comment. Active Super welcomed more checks on what funds say, but didn’t talk about their legal issues.

"Greenwashing is not limited to environmental claims but extends to misleading ethical propositions. Entities which seek to promote ethical investing must ensure their statements are accurate and able to be substantiated."
Sarah Court
ASIC Deputy Chair

ASIC says lots of funds and companies aren’t living up to their green promises. They’ve been especially tough on false claims about avoiding fossil fuels, tobacco, gambling, and Russian investments. They’ve even fined companies for making misleading claims in Facebook posts.

Court stressed the importance of honesty in marketing ethical funds. “You don’t have to make these claims. You are doing it to be attractive to investors. If you do, you have to make sure you are living up to those claims,” she said. She believes it’s vital for investors to trust these claims, as they often can’t check if they’re true.

ASIC released guidelines on greenwashing in June and has been watching funds and companies more closely since then. Some funds are admitting when they get it wrong, while others are being called out by their competitors.

This move by ASIC is part of a global trend. Countries around the world are starting to fight greenwashing. In Australia, the government is supporting ASIC’s efforts with funding and plans to make climate reporting mandatory for companies starting in 2024.

Court mentioned that Australia is leading the way in this area. The world is watching as they tackle false environmental and ethical claims in the financial sector.

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