ASIC Cracks Down on Greenwashing: 47 Actions, $123K Fines

Key Takeaways

• ASIC took 47 actions on greenwashing from April 2023 to June 2024 including legal action and fines over $1,23,000.
• The focus was on misleading claims in sustainable finance across listed companies, as well as managed and superannuation funds.
• ASIC is getting ready for accurate sustainability disclosures as the government gets closer to mandatory climate-related financial reporting.

Australian Securities and Investments Commission (ASIC) has taken 47 actions on greenwashing over the 15 months to June 30, 2024: two Federal Court cases and over $1,23,000 in fines.

The measures are part of ASIC’s broader work outlined in Report 791, ASIC’s interventions on greenwashing misconduct: 2023–2024 (REP 791) to get rid of misleading practices in sustainable finance products and services.

This report also includes findings, recommendations and examples of best practices based on surveillance from April 1, 2023 to June 30, 2024.

ASIC Commissioner Kate O’Rourke said, “Investors and consumers deserve clear and accurate information to make informed investment decisions. Greenwashing erodes that trust.”

From April 1, 2023, to June 30, 2024, ASIC’s actions included:

• 37 corrective actions from various entities;
• 8 infringement notices over $1,23,000; and
• 2 Federal Court cases against LGSS Pty Limited (Active Super) and Vanguard Investments Australia.

ASIC also pursued a civil penalty against Mercer Superannuation, which concluded with an $11.3 million penalty.

The actions were about:

• Inadequate disclosure of ESG investment screens and methodologies;
• Investments not aligned with claimed ESG policies; and
• Unsubstantiated sustainability claims.

ASIC’s greenwashing surveillance covered listed companies, managed funds, superannuation funds and the wholesale green bond market.

“Our surveillance shows there’s work to be done and we encourage product issuers and advisers to get their disclosures right,” O’Rourke said.

ASIC recommends entities review the report and Information Sheet 271 on avoiding greenwashing to reduce risk.

The proposed mandatory climate-related financial disclosure requirements for large businesses and financial institutions are nearing approval. The Bill has passed the Senate and is awaiting Royal Assent. More information will be on ASIC’s website.

ASIC will take a pragmatic approach to supervising and enforcing the new rules. They will work with the industry to develop guidance to help businesses meet their new requirements.

During the transition to mandatory climate reporting, ASIC will ensure current disclosure and governance standards are maintained and entities comply with existing laws including the ban on misleading conduct.

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Source: ASIC