The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings in the Federal Court against Mercer Superannuation (Australia) Limited for allegedly making misleading statements about the sustainable nature and characteristics of some of its super investment options.
“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,” said ASIC deputy chair Sarah Court.
The regulator alleges that Mercer made statements on its website about seven ‘Sustainable Plus’ investment options offered by the Mercer Super Trust, of which Mercer is the trustee.
These statements marketed the Sustainable Plus options 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 said to apply to companies involved in alcohol production and gambling. However, the regulator alleges that members who took up the Sustainable Plus options had investments in companies involved in industries the website statements said were excluded, for example:
- Fifteen companies involved in the extraction or sale of carbon intensive fossil fuels (including AGL Energy, BHP Group, Glencore and Whitehaven Coal
- Fifteen companies involved in the production of alcohol (including Budweiser Brewing Company APAC, Carlsberg AS, Heineken Holding and Treasury Wine Estates)
- Nineteen companies involved in gambling (including Aristocrat Leisure, Caesar’s Entertainment, Crown Resorts and Tabcorp Holdings)
“There is increased demand for sustainability-related financial products, and with that comes the growing risk of misleading marketing and greenwashing,” said Ms Court.
“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.”
ASIC has issued over $140,000 in infringement notices in response to concerns about alleged greenwashing, which include Tlou Energy, Vanguard Investments Australia, Diversa Trustees and Black Mountain Energy.
Action against greenwashing has been highlighted as one of ASIC’s 2023 enforcement priorities and this proceeding is the regulator’s first court action in this regard.
This proceeding is also the first time ASIC has commenced court action after legislative amendments arising from the Financial Services Royal Commission enhanced its powers to take action regarding a broader range of super trustee conduct.
ASIC is seeking declarations and pecuniary penalties from the court and injunctions preventing Mercer from continuing to make any of the alleged misleading statements on its website, and orders requiring Mercer to publicise any contraventions found by the court.
The date for the first case management hearing is yet to be scheduled by the court.
