Federal Court to tackle ASIC's first greenwashing court action

Mercer Superannuation was accused of misleading statements about the sustainability of some products

Federal Court to tackle ASIC's first greenwashing court action

The Federal Court is set to take on the first greenwashing-related court action filed by ASIC against Mercer Superannuation (Australia) Limited.

“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”, ASIC deputy chair Sarah Court said.

The commission accused Mercer of publicising “misleading statements about the sustainable nature and characteristics of some of its superannuation investment options”, and kicked off civil penalty proceedings. According to ASIC, Mercer claimed on its website that its Sustainable Plus investment options left out investments in companies “involved in carbon intensive fossil fuels like thermal coal” as well as companies linked to alcohol production and gambling.

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Mercer’s statements on the Sustainable Plus products suggested that the Sustainable Plus options were geared towards members who “are deeply committed to sustainability”. However, ASIC said it found that several companies investing under the Sustainable Plus options were actually involved with carbon intensive fossil fuels, alcohol production and gambling.

Thus, the commission pointed out that Mercer’s statements regarding the Sustainable Plus products were false, and that the company had engaged in conduct that had the potential of misleading the public.

“There is increased demand for sustainability-related financial products, and with that comes the growing risk of misleading marketing and greenwashing,” Court explained. “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 is aiming to obtain declarations and pecuniary penalties, as well as injunctions to keep Mercer from continuing to make the type of statements ASIC challenged on its website. If ASIC is victorious in court, Mercer could also be ordered to publicise any contraventions identified by the court, the commission added.

The commission also indicated that this is the first time it launched court proceedings after legislative amendments resulting from the Financial Services Royal Commission boosted ASIC’s power to “take action regarding a broader range of superannuation trustee conduct”. The commission explained that action against greenwashing is among its 2023 Enforcement Priorities.

The Federal Court has yet to set a date for the first case management hearing.

The Sustainable Plus investment options are offered under the Mercer Super Trust, where Mercer is the trustee.

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