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ASIC labels greenwashing ‘corrosive agent’ to market integrity

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By Report
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4 minute read

Greenwashing is the “corrosive agent” to market integrity, according to Australian Investments and Securities Commission (ASIC) deputy chair Karen Chester.

Speaking at the Responsible Investment Association of Australasia (RIAA) conference, Ms Chester elaborated on how the regulator was enforcing greenwashing by funds and companies.

Ms Chester said there are three “antidotes” to greenwashing which ASIC was working on in unison.

These were:

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  • Transparency, through disclosures that comply with today’s law and ultimately a quality, global baseline for sustainability-related disclosure standards;
  • Policy-installed “bright lines” to support that disclosure; and
  • Regulators doing their job and working together in doing so.
“Taken collectively, these policy initiatives will provide the ‘bright lines’ to afford greater comparability in climate-related financial disclosure and, over time, sustainability issues more generally.

“Taken collectively they will also, over time, prove to be a broad antidote to greenwashing. The ‘nowhere to hide’ transparency of quality and comparable climate-related financial disclosures with the supporting policy installed ‘bright lines’,” she said.

“Over the long-term, case-by-case intervention is not a cost-effective nor comprehensive antidote to greenwashing. We are therefore active in supporting Treasury in these policy developments to support increased transparency and trust across the system.”

ASIC unveils recent greenwashing actions

ASIC has made 35 interventions in response to its greenwashing surveillance activities from 1 July 2022 to 31 March 2023.

The corporate regulator released a short report on Wednesday detailing the 35 interventions it has made including 23 corrective disclosure outcomes, 11 infringement notices issued, and in one case, the commencement of civil penalty proceedings.

The latter relates to court action ASIC launched against Mercer Superannuation for allegedly making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.

Referring to the report on Wednesday, Ms Chester said, “this report discloses ‘how and why’ ASIC has taken action against greenwashing. All 35 interventions follow the release of our ‘How to avoid greenwashing’ information sheet in June last year”.

“Where we have seen potentially misleading disclosures, we have taken regulatory action. Our interventions range from securing timely corrections, issuing public infringement notices through to commencing civil penalty proceedings.”

According to Ms Chester, all 35 of ASIC’s interventions are aimed squarely at promoting fair and transparent markets so that retail investors and financial consumers are well informed and not misled on the “green credentials” of investments and listed companies.

“We have ongoing surveillances and several investigations underway and anticipate further regulatory action,” said Ms Chester.

In Tuesday’s budget, the government confirmed $4.3 million would go to ASIC in 2023–24 to ensure the integrity of sustainable finance markets by investigating and undertaking enforcement action against market participants engaging in greenwashing and other sustainable finance misconduct. 

The funding for these activities will, however, be cost recovered through levies under ASIC’s industry funding model. 

Ms Chester pointed out that in disclosing how and why ASIC intervened, alongside the corrective outcomes of its actions, it hoped to further inform the market on how to avoid greenwashing.

The report also provides timely transparency to the market on the nature of the matters where ASIC has intervened, with reference to:

  • net zero statements and targets;
  • use of terms such as “carbon neutral”, “clean” or “green”;
  • fund labels; and
  • scope and application of investment exclusions and screens.

ASIC labels greenwashing ‘corrosive agent’ to market integrity

Greenwashing is the “corrosive agent” to market integrity, according to Australian Investments and Securities Commission (ASIC) deputy chair Karen Chester.

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Maja Garaca Djurdjevic

Maja Garaca Djurdjevic

Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.

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