The Australian Securities & Investments Commission (ASIC) has brought pension fund Mercer Superannuation to court for alleged greenwashing in its first legal action of this kind. Mercer is thought to be misleading its members regarding the sustainability of some of its investment options, the corporate regulator said in a statement.
Rising interest in sustainable and ethical investments has led to increased focus on corporate greenwashing, or the practice of exaggerating the environment-friendly qualities of an investment or product.
In its case against Mercer ASIC refers to statements made by the pension fund on its website regarding seven of its investment options, which supposedly exclude investments in companies operating in industries such as carbon-intensive fossil fuels, alcohol production and gambling. These were marketed as “Sustainable Plus” options and recommended for members “deeply committed to sustainability”.
However, 15 of the companies included in them were found to be involved in the extraction or sale of carbon-intensive fossil fuels, for example AGL Energy Ltd, BHP Group Ltd, Glencore PLC and Whitehaven Coal Ltd, another 15 — in alcohol production and 19 —in gambling, according to ASIC.
Last year, the regulator announced a boost in the supervision of climate-related reporting and ongoing investigations of suspected greenwashing by several companies and financial institutions, Reuters reported.
“There is increased demand for sustainability-related financial products, and with that comes the growing risk of misleading marketing and greenwashing,” the watchdog said in the statement announcing the legal action.
Mercer has said that it has cooperated with ASIC during the investigation and that it would not provide further comments at this point since the case is now in court.
According to local activist investor group Market Forces, which is also an affiliate project of Friends of the Earth Australia, the case launched by ASIC is expected to cause a stir in the superannuation industry and generally in the corporate sector across the country, Reuters said.
Read more: Australia Set To Introduce Mandatory Climate Reporting For Companies In 2024