Super Fund Caught “Greenwashing”: ASIC’s Court Action Sets an Example

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Australian Securities and Investment Commission (ASIC) has taken court action against a super fund for ‘greenwashing’ their investments, setting an example for other funds.

Mercer Superannuation (Australia) Limited (Mercer) is facing its first court action from the Australian Securities and Investments Commission (ASIC) over allegations of greenwashing.

According to ASIC, Mercer is accused of falsely claiming their superannuation investment options. These options were marketed as suitable for members who prioritised sustainability and were supposed to avoid investments in businesses that produce alcohol, gambling, and carbon-intensive fossil fuels.

ASIC claims that the individuals who opted for Sustainable Plus had invested in numerous companies in the excluded industries.

The Commission wants the court to provide declaratory and injunctive relief and impose monetary penalties to ensure financial institutions make accurate sustainability-related claims.

“Mercer is the first superannuation provider to be taken to court by ASIC for greenwashing,” said ASIC Commissioner Joseph Longo. “Where necessary, we will take enforcement action against firms for making false claims about investments that are not sustainable.”

Which parties need to be informed about this?

Financial institutions that provide sustainability-related or ethical investment options, such as managed funds and super fund trustees. Additionally, compliance and risk management teams ensure the accuracy and transparency of marketing materials and disclosures. Finally, executive leaders and boards responsible for establishing strategic priorities and risk management frameworks should also be aware of this.

What opportunities exist for change?

Financial institutions should take this chance to review their disclosure statements and policies relating to sustainability-related goods and investments. By doing so, they can ensure that their marketing materials and disclosures accurately reflect the actual status of these goods and investments while preventing greenwashing conduct. Compliance and risk management teams should review their policies and procedures to ensure they are adequate and being followed.

“The court action serves as a reminder to financial services licensees, including superannuation trustees, that ASIC expects them to be upfront and honest in their marketing and disclosure of products to consumers,” Longo said.

ASIC’s court action against Mercer provides an important example for all financial institutions about the risks posed by greenwashing and the need for accurate disclosure. It is a warning that misleading statements about sustainability or ethical investments will not be tolerated.

In light of this action, financial institutions should review their policies and procedures to ensure they meet their obligations under the law. This case also serves as an essential reminder of transparency and accuracy when marketing or disclosing investment information. The consequences of not doing so can be serious, as is evidenced by ASIC’s current action against Mercer.

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