ASIC finally starts to look at greenwashing
By: Mike Ritchie, MRA Consulting Group
The court imposed an $11 million penalty on Mercer Superannuation for misleading consumers about the environmental claims made in its “Sustainable Plus” investment options.
$11m is the highest penalty ordered by a court for greenwashing and is a precedent for the Federal Court.
In the period 2021-23, Mercer claimed that its Sustainable Plus Investment Options excluded investments in fossil fuel, gambling and alcohol companies. But the court found that was porkies with six out of seven of the Mercer funds investing or allowing investment in those types of companies.
To their credit Mercer admitted to breaches of the ASIC Act about making false or misleading representations that could mislead the public.
The court decided that this type of commentary was “greenwashing”, in that it falsely made environmental or sustainability claims that made the Investment Options look more environmentally friendly. Something that we in the environment sector have been railing against for decades.
Mercer were fined half of the maximum penalty under the relevant section of the ASIC Act which was $22m.
It was also required to publish a notice on its web site that it had stuffed up and mislead consumers.
The Senate Standing Committee on Environment and Communications is also currently inquiring into greenwashing. We expect its report by the end of 2024. It cannot come soon enough.
While action by ASIC on greenwashing in the financial services sector is a start, it does nothing to reduce greenwashing in the rest of the economy and particularly by governments and other businesses.
More needs to be done, faster.
Mike Ritchie is the Managing Director at MRA Consulting Group.
