ASIC brings first greenwashing case to court, Mercer Superannuation

Rick Steves

“There is increased demand for sustainability-related financial products, and with that comes the growing risk of misleading marketing and greenwashing. If financial products make sustainable investment claims to investors and potential investors, they need to reflect the true position.”

The Australian Securities and Investment Commission has announced its first court action against alleged greenwashing conduct, commencing civil penalty proceedings in the Federal Court against Mercer Superannuation (Australia) Limited.

Mercer is being accused of making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.

Sustainable Plus Investment Options are available to members of the Mercer Super Trust through the ‘Select-your-own’ investment options, which allows members to blend options to suit their needs and are marketed ‘for potential members that are deeply committed to sustainability’, comprise a higher proportion of sustainability-themed assets and are subject to additional investment exclusions of companies in certain sectors.

“Growing risk of misleading marketing and greenwashing”

Sarah Court, Deputy Chair at ASIC 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.

‘There is increased demand for sustainability-related financial products, and with that comes the growing risk of misleading marketing and greenwashing. If financial products make sustainable investment claims to investors and potential investors, they need to reflect the true position. If investments in certain industries like fossil fuels are said to be excluded, this promise must be upheld.”

According to ASIC, Mercer made statements on its website about seven ‘Sustainable Plus’ investment options offered by the Mercer Super Trust, of which Mercer is the trustee.

The Sustainable Plus options were marketed as suitable for members who ‘are deeply committed to sustainability’ because they excluded investments in companies involved in carbon intensive fossil fuels like thermal coal. Exclusions were also stated to apply to companies involved in alcohol production and gambling.

ASIC findings, however, say otherwise as the Sustainable Plus options had investments in companies in officially excluded industries, including:

  • 15 companies involved in the extraction or sale of carbon intensive fossil fuels (including AGL Energy Ltd, BHP Group Ltd, Glencore PLC and Whitehaven Coal Ltd);
  • 15 companies involved in the production of alcohol (including Budweiser Brewing Company APAC Ltd, Carlsberg AS, Heineken Holding NV and Treasury Wine Estates Ltd); and
  • 19 companies involved in gambling (including Aristocrat Leisure Limited, Caesar’s Entertainment Inc, Crown Resorts Limited and Tabcorp Holdings Limited).

ASIC charges Mercer of making false and misleading statements and engaging in conduct that could mislead the public.

The regulator has issued over $140,000 in infringement notices in response to concerns about alleged greenwashing, which include Tlou Energy Limited, Vanguard Investments Australia, Diversa Trustees Limited, and Black Mountain Energy.

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