By Katie Lau and Teresa Torcasio -
Snapshot
- 2024 has been a pivotal year in the battle against greenwashing, with regulatory watchdogs ASIC and ACCC intensifying their efforts to combat false or misleading environmental and sustainability claims and conduct.
- Among the many infringement notices issued so far for greenwashing, we have now seen three landmark Federal Court decisions against two separate trustees of superannuation funds and a fund manager on the basis they engaged in greenwashing relating to the marketing of their investments.
- Businesses are reminded to accurately represent their green and sustainability practices, and to ensure they have established processes in place to test and vet marketing and communication materials.
Since late 2022, Australian regulatory watchdogs have remained vigilant in their quest to stamp out false and misleading environmental, sustainability and social responsibility claims (often referred to as ‘greenwashing’). Both the ACCC and ASIC have listed enforcing greenwashing claims as a key regulatory priority in their annual enforcement and compliance priorities for consecutive years with many enforcement actions already under their belts.
This year, ASIC issued legal proceedings against a fund manager and the trustees of two major superannuation funds, alleging in each case that the defendants made false or misleading statements about the sustainability and ethical benefits of their respective investments. In each outcome, the Court declared the defendants made false or misleading statements in relation to the ESG credentials of their investments. In August 2024, the Federal Court made its first landmark civil penalty order against one of those funds in Australian Securities & Investments Commission v Mercer Superannuation (Australia) Limited [2024] FCA 850 (‘Mercer’), ordering Mercer to pay a $11.3 million civil penalty. More recently on 25 September 2024, the Federal Court imposed an even heftier penalty of $12.9 million against fund manager, Vanguard, in Australian Securities and Investments Commission v Vanguard Investments Australia Ltd [2024] FCA 308 (‘Vanguard’). At the date of writing, we are still awaiting the findings of the Court on penalties for LGSS Pty Ltd in Australian Securities and Investments Commission v LGSS Pty Ltd [2024] FCA 587 (‘Active Super’).
This article outlines the legislative framework underpinning greenwashing actions, provides a summary of the issues and findings in the three cases mentioned above, and takes a deep dive into the rationale for the penalty orders made in Mercer and Vanguard.
