The Australian financial regulator has issued a greenwashing avoidance guide in the wake of its recent crusade against the practice that saw almost 50 ‘interventions’ over the 15 months to June 30.
Over the last two years the Australian Securities and Investments Commission (ASIC) has won three civil court actions against Vanguard, Active Super and Mercer over greenwash claims – earning the latter an $11.3 million fine earlier in August.
Penalties are pending in the Active Super and Vanguard cases but the ASIC report lays out 45 other ‘interventions’ conducted over the 15-month period (and 80 during two years to June 30) to combat alleged greenwashing.
“These interventions were made across a range of sectors and entities, spanning listed companies, investment managers, superannuation trustees and responsible entities,” the report says. “Our actions have been commensurate with the seriousness of the conduct and the resulting levels of harm.”
The spate of ASIC greenwash pings came after an in-depth surveillance of market activity, the report says, across a wide range of sectors including managed funds, superannuation schemes, listed companies and the wholesale green bond issuers.
Kate O’Rourke, ASIC commissioner, said in a statement: “Our surveillance indicates there is ample room for improvement and we strongly encourage product issuers and their advisers to focus on the quality of disclosures and the data underpinning them.
“Sustainability-related information, like any other, should be accurate, based on reasonable grounds and be easily understood by investors.”
The report says the Australian greenwash interventions have thrown up four “broad areas of concern”, namely:
- underlying investments that are inconsistent with disclosed ESG investment screens and investment policies;
- sustainability-related claims made without reasonable grounds;
- insufficient disclosure on the scope of ESG investment screens
and investment methodologies; and,
- sustainability-related claims made without sufficient detail.
“ASIC continues to encourage product issuers, company directors and advisers to improve the quality of sustainability-related disclosures and the data that underpins them,” the report says.
Among other recommendations, ASIC says ‘responsible entities’ – the equivalent of licensed supervisors in NZ – must be more vigilant in policing the ESG (and the like) claims of the managers and products they oversee.
Such investment government bodies “need to take adequate steps to ensure investments made by their managers or sub-managers are competently and independently verified as being consistent with the claims made about the funds’ sustainable strategies”.
While ASIC does not have jurisdiction in NZ, the outcomes of its regulatory crackdown on greenwashing allegations will be of interest to fund managers on this side of the Tasman (as well as lawyers).