ASIC has kicked-off its greenwashing campaign by commencing legal proceedings against Mercer for making false and misleading statements.
ASIC has commenced legal proceedings against Mercer Superannuation (Australia) Limited (Mercer), alleging that the company made false and misleading statements in relation to a number of superannuation investment options (the Options).
ASIC alleges that Mercer marketed the Options as being suitable “for potential members that are deeply committed to sustainability” and claimed that the Options excluded investments in particular industries, such as carbon intensive fossil fuels, alcohol and gambling.
Upon closer inspection, however, ASIC says that the Options actually included investments in:
15 companies in the carbon intensive fossil fuel industry;
15 companies in the alcohol industry; and
19 companies in the gambling industry.
If ASIC is successful, Mercer will likely be hit with pecuniary penalties, injunctions and an order to publicise its contraventions.
Although ASIC has issued a number of infringement notices for ‘greenwashing’ in the past, this is the first time that it has commenced legal proceedings in relation to such conduct. It is the first concrete action underlining ASIC’s stated commitment to cracking down on greenwashing in 2023 and will serve as an example to other businesses that greenwashing will be taken seriously.
Greenwashing is essentially the act of trying to convince consumers that products are more environmentally or socially friendly than they truly are. As the global demand for environmentally and socially conscious products and services increases, those themes will become more ubiquitous in marketing and advertising - and with that an increased risk of exaggerated claims to environmental and social responsibility.
The lookout for ‘greenwashing’ extends beyond the financial services realm. Federal regulators, including the ACCC, have put businesses on notice for conduct of this nature and the potential for it to be misleading or deceptive to consumers. Businesses should beware of making claims about their environmental or ethical credentials or their future goals (e.g. “net-zero” by 2030) if there is no real basis to make the claim or a plan to make a goal a reality. This action is a clear signal that these claims will be tested if the regulator suspects that there is no foundation for claiming to be sustainable, ethical or socially responsible.
If you require any assistance or advice to help you achieve your regulatory compliance, environmental sustainability or corporate social responsibility objectives, please contact a member of our Financial Services or ESG teams.
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