15 March 2023
#Corporate & Commercial Law, #Environmental, Social and Governance (ESG), #Superannuation, Funds Management & Financial Services
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.
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.
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.
If you have any questions regarding this article or require legal assistance with reviewing your disclosure statements, please get in touch with our team below. You can also read more about greenwashing and how your business can stay off the regulator's radar here.
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.