📰 Active Super ordered to pay $10.5 million penalty in ASIC’s third greenwashing court action
For greenwashing misbehaviour, the Federal Court today fined Active Super $10.5 million.
The Federal Court decided in June 2024 that Active Super broke the law when it made investments in several securities it had claimed were banned or limited by its environmental, social, and governance (ESG) investment screens.
"This is a substantial penalty that sends a strong message to companies making sustainable investment claims that those claims need to reflect the true position," ASIC Deputy Chair Sarah Court said.
This case demonstrates ASIC’s commitment to taking on misleading marketing and greenwashing claims made by companies promoting financial services. It is our third greenwashing court outcome, and we will continue to keep greenwashing in our sights.’
Active Super claimed in its marketing that it eliminated investments that posed too great a risk to the environment and the community, including gambling, coal mining and oil tar sands. Following the invasion of Ukraine, Active Super also made representations that Russian investments were ‘out’.
However, contrary to these representations, Active Super held direct and indirect investments in companies such as SkyCity Entertainment Group Ltd (gambling), Gazprom PJSC (Russian entity), Shell Plc (Oil tar sands) and Whitehaven Coal (Coal mining).
His Honour, Justice O’Callaghan said:
‘It was not disputed that LGSS’s contraventions were serious. LGSS benefitted from its misleading conduct by misrepresenting the “ethical” nature of a significant part of its investments, which on any view enhanced its ability to attract investors to the Active Super fund and enhanced its reputation as a provider of investment funds with ESG characteristics. As a result, investors lost the opportunity to invest in accordance with their investment values.
‘Further, the contravening conduct continued over an extensive period of time (approximately two and a half years); the likely causes of it were never explained; it concerned substantial investments; it was likely to have led to investors losing confidence in ESG programs; and the failure by LGSS to have in place properly functioning systems and processes designed to ensure that its representations were not false or misleading was the responsibility of senior management. Further, when confronted with the allegations by ASIC, LGSS ran a host of contrived arguments in its defence at trial.’
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