'Greenwashing' case underway
ASIC is, for the first time, taking a company to court over claims of ‘greenwashing’.
Mercer, the retail superannuation giant, has been accused by the corporate watchdog, the Australian Securities and Investments Commission (ASIC), of misleading members about the sustainability of its investments.
ASIC claims that Mercer Superannuation, which oversees $27.5 billion in assets, misled members of its Sustainable Plus fund by claiming it excluded companies involved in carbon-intensive fossil fuels, but then heavily invested in 15 stocks from the sector, including AGL Energy, BHP, Glencore, and Whitehaven Coal.
It also invested in 34 companies in the alcohol and gambling sectors, including Crown Resorts, Tabcorp, Budweiser, Carlsberg, and Heineken, despite excluding those sectors from the fund.
Mercer marketed the sustainable option as suitable for members who were “deeply invested to sustainability,” and the exclusions that it peddled were alleged by ASIC to break laws against misleading consumers.
ASIC's Deputy Chair, Sarah Court, warned the watchdog was cracking down on alleged greenwashing such as this amid growing consumer concern around social and environmental issues.
She said that if financial products made sustainable investment claims to investors, they must reflect the true position, and promises such as excluding investments in fossil fuels must be upheld.
The landmark case reflects ASIC’s efforts to ensure sustainability-related claims made by financial institutions are accurate.
Last October, the regulator warned that it was investigating multiple super fund trustees and listed companies for allegedly lying about their green credentials.
The Mercer case is also ASIC's first court action since new laws, sparked by the Hayne royal commission, gave it more power to enforce a broader range of superannuation trustee conduct.
ASIC is seeking an injunction to stop Mercer from continuing to make any of the allegedly misleading statements on its website, as well as declarations of wrongdoing and fines.
A Mercer spokesman said the fund had cooperated with ASIC's investigation and would “continue to carefully consider” the watchdog's concerns, but that it would be “inappropriate to comment further” while the case is before the courts.
The super fund manages money for nearly 300,000 members.