ASIC counts 35 regulatory actions against greenwashing ahead of ISSB standards

Rick Steves

“Our interventions ranged from securing timely corrections and issuing public infringement notices through to commencing civil penalty proceedings.”

The Australian Securities and Investments Commission has announced it has taken 35 regulatory interventions against greenwashing activity in the nine months to March 2023.

The financial watchdog believes that, while enforcement actions are proportionate remedies, a more enduring antidote to greenwashing lies in comparable high-quality disclosure to meet investor information needs.

On that note, ASIC is preparing the industry for upcoming global standards for Sustainable Finance, which will soon come into effect in order to combat the greenwashing eroding investor confidence in the market for sustainability-related financial products and corporate strategies.

Combatting greenwashing is a top priority for ASIC

The regulator has made combatting greenwashing a top priority and is delivering on this priority through proactive surveillance and enforcement of governance and disclosure standards.

ASIC deputy chair Karen Chester said, ultimately, only meaningful, responsible, and transparent disclosure will effectively combat greenwashing practices.

“A year ago, I penned a Company Director article following the release of ASIC Information Sheet 271 How to avoid greenwashing when offering or promoting sustainability-related products. We called upon superannuation and investment funds, plus directors more broadly, to review practices against the nine questions set out in the information sheet.

“Those nine questions, informed by ASIC’s surveillance of current practices, were framed to avoid misleading and deceptive greenwashing practices. We also flagged that we were moving to a disrupt-and-enforce stance. One year on, we published a short report in May on ASIC’s recent greenwashing interventions, detailing the 35 interventions we have taken against greenwashing over the nine months to March 2023.

“Our interventions ranged from securing timely corrections and issuing public infringement notices through to commencing civil penalty proceedings. Importantly, the report provides transparency on why and how we have intervened, alongside the corrective outcomes of our actions. In doing so, we wanted to further inform market participants on how to avoid greenwashing practices when preparing disclosures and making representations.”

Types of greenwashing identified by ASIC

The Australian regulatory body intervenes in cases where:

  • Net zero statements and targets did not appear to have a reasonable basis, or were factually incorrect
  • Terms like ‘carbon neutral’, ‘clean’ or ‘green’ didn’t appear to have a reasonable basis for the related claims
  • The use of inaccurate labelling or vague terminology in sustainability-related funds
  • The scope or application of a sustainability-related investment screen or exclusion being vague or overstated in a PDS or on associated websites for ESG-related financial products.

The regulator wants transparency through meaningful disclosure that complies with today’s law: a mandatory climate change-related disclosure regime in Australia that is based on the global baseline being developed by the International Sustainability Standards Board (ISSB), said Karen Chester.

“ASIC supports the government’s climate reporting and broader sustainable finance strategy (including anti-greenwashing initiatives and disclosure supportive policies like ESG labelling) through our role on the Council of Financial Regulators Climate Working Group. These policy initiatives will provide the ‘bright lines’ to afford greater comparability in climate-related disclosures and, over time, sustainability issues.”

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