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ASIC issues infringement notices against Vanguard for greenwashing

By Reporter
2 minute read

ASIC has issued three infringement notices to investment manager Vanguard in further action against alleged greenwashing.

In a statement on Friday, the corporate regulator said it was concerned that product disclosure statements for the Vanguard International Shares Select Exclusions Index Funds (the Vanguard Funds) may have been liable to mislead the public by overstating an exclusion, otherwise known as an investment screen, claimed to prevent investment in companies involved in significant tobacco sales.

“Greenwashing is not limited to environmental claims but extends to misleading ethical propositions. Entities which seek to promote ethical investing must ensure their statements are accurate and able to be substantiated,” said ASIC deputy chair Sarah Court.

According to ASIC, the Vanguard Funds were structured to exclude certain investments in tobacco. However, while this screen applied to exclude manufacturers of cigarettes and other tobacco products, it did not exclude companies involved in the sale of tobacco products.

“Investors can feel strongly about not investing in tobacco production, manufacturing and sales, and where tobacco-exclusion investments are promoted, the entity making those claims must be able to substantiate the full exclusion of those investments,” Ms Court said.

Vanguard paid $39,960 in compliance with the infringement notices on 1 December 2022. ASIC clarified that “payment of an infringement notice is not an admission of guilt or liability”.

Enforcement action against greenwashing is one of ASIC’s current priorities.