In June 2024, the court ruled that Active Super breached the law by investing in securities it had claimed were excluded or restricted under its environmental, social and governance (ESG) investment policies.
According to the regulator, in its marketing, Active Super claimed to exclude investments that posed environmental and social risks, including gambling, coal mining and oil tar sands. Following the invasion of Ukraine, it also stated that Russian investments were “out”.
However, the court found that despite these claims, Active Super held direct and indirect investments in companies such as SkyCity Entertainment Group (gambling), Gazprom PJSC (Russian entity), Shell Plc (oil tar sands), and Whitehaven Coal (coal mining).
“This is a significant penalty that sends a strong message to companies making sustainable investment claims that those claims need to reflect the true position,” said ASIC deputy chair Sarah Court.
“This case demonstrates ASIC’s commitment to taking on misleading marketing and greenwashing claims made by companies promoting financial services. It is our third greenwashing court outcome and we will continue to keep greenwashing in our sights.”
In the ruling, Justice O’Callaghan emphasised the severity of the misconduct, stating that the trustee, LGSS, benefited from misleading investors about the ethical nature of its investments, which bolstered Active Super’s reputation and appeal while depriving investors of the opportunity to align their investments with their values.
“It was not disputed that LGSS’ contraventions were serious. LGSS benefited from its misleading conduct by misrepresenting the ‘ethical’ nature of a significant part of its investments, which, on any view, enhanced its ability to attract investors to the Active Super fund and enhanced its reputation as a provider of investment funds with ESG characteristics. As a result, investors lost the opportunity to invest in accordance with their investment values,” Justice O’Callaghan said.
“Further, the contravening conduct continued over an extensive period of time (approximately two and a half years); the likely causes of it were never explained; it concerned substantial investments; it was likely to have led to investors losing confidence in ESG programs; and the failure by LGSS to have in place properly functioning systems and processes designed to ensure that its representations were not false or misleading was the responsibility of senior management. Further, when confronted with the allegations by ASIC, LGSS ran a host of contrived arguments in its defence at trial.”
Active Super, a profit-to-member superannuation fund, merged with Vision Super on 1 March 2025. Before the merger, as of 30 June 2024, it managed approximately $14.7 billion in superannuation assets for 86,547 members.
