The Australian Securities and Investments Commission (ASIC) has disclosed its intensified efforts against greenwashing.
According to Environmental Finance, over a 15-month period ending 30 June 2024, ASIC has undertaken 47 regulatory interventions aimed at curbing misleading environmental claims, a move marking a significant uptick in enforcement activity.
Among these interventions, the regulator has initiated two Federal Court proceedings and collected over AUD123,000 ($82,800) through infringement notices. A landmark penalty of AUD11.3m ($7.7m) was imposed on Mercer Superannuation this month, highlighting the severe repercussions for greenwashing in Australia. This penalty is notable as it represents the first of its kind against a superannuation fund.
Further illustrating the regulator’s proactive stance, ASIC is currently involved in a high-profile case against Vanguard Investments Australia. Although the judgment is pending, earlier rulings found Vanguard guilty of making misleading claims about the environmental, social, and governance (ESG) criteria applied in its bond index fund.
ASIC’s Report 791 sheds light on the main areas of concern regarding greenwashing. These include discrepancies between stated and actual investment activities, unsubstantiated sustainability claims, and inadequate disclosure about investment methodologies. Additionally, while no misconduct was found in the wholesale green bond market, ASIC has identified areas needing better disclosure and transparency.
In its ongoing efforts to improve industry standards, ASIC has also been actively monitoring the carbon markets and engaging with key market players. To further prevent greenwashing, it has issued guidance urging improved sustainability disclosures and underpinning data quality.
Moreover, upcoming federal initiatives, including the development of an Australian sustainable finance taxonomy in partnership with the Australian Sustainable Finance Institute and a new sustainable investment product labelling regime, are set to bolster these efforts. These measures aim to enhance the transparency, comparability, and consistency of sustainability-related disclosures.
ASIC’s actions extend beyond just oversight; it will soon administer and enforce a new mandatory climate reporting regime to align with the International Sustainability Standards Board’s climate standards. This initiative reflects a broader commitment to ensuring that sustainability claims are not only accurate but also legally compliant.
ASIC chair Karen Chester emphasised the importance of rigorous and truthful environmental reporting. “Sustainability-related information should be based on reasonable grounds, use language that ensures sufficient understanding by investors, and be accurate and data-driven,” she stated, underscoring the critical nature of these disclosures across all sectors.
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