On 23 August 2024, the Australian Securities and Investments Commission (ASIC) announced a series of regulatory interventions aimed at curbing greenwashing misconduct in the sustainable finance sector. Over a 15-month period leading up to 30 June 2024, ASIC undertook 47 actions, including the initiation of two Federal Court proceedings and the issuance of over $123,000 in infringement notice payments. These efforts are detailed in Report 791: ASIC’s Interventions on Greenwashing Misconduct: 2023–2024 (REP 791), which outlines the regulator’s ongoing commitment to addressing misleading and deceptive conduct related to sustainability claims. Over this period, ASIC made significant interventions in its fight against greenwashing. These actions includes the commencement of two civil penalty proceedings, the finalization of one civil penalty case resulting in $11.3 million in penalties, the issuance of eight infringement notices, and the achievement of 37 corrective disclosure outcomes, reflecting ASIC’s robust approach to ensure transparency and accountability within the sustainable finance sector.
The report provides a comprehensive overview of ASIC’s surveillance activities and highlights findings, recommendations, and examples of good practices within the industry. ASIC Commissioner Kate O’Rourke underscored the importance of combating greenwashing to maintain trust in sustainable finance products and services. She emphasized that investors and consumers are entitled to accurate and reliable information to make informed decisions.
The interventions included obtaining 37 corrective disclosures from various entities, issuing eight infringement notices, and pursuing civil penalty proceedings against LGSS Pty Limited (Active Super) and Vanguard Investments Australia. Additionally, ASIC progressed its case against Mercer Superannuation (Australia) Limited, resulting in an $11.3 million penalty.
These regulatory actions focused on several key areas, such as insufficient disclosure regarding Environmental, Social and Governance (ESG) investment screens, inconsistencies between disclosed ESG policies and underlying investments, and sustainability claims made without reasonable grounds. ASIC’s surveillance covered a broad spectrum of sectors, including listed companies, managed funds, superannuation funds, and the wholesale green bond market.
ASIC’s proactive stance sends a clear message about the importance of accuracy in sustainability-related information. By holding companies accountable for their ESG claims, ASIC is working to build a more transparent and responsible investment landscape, which is crucial for genuine sustainable development.
Since the publication of Report 763, ASIC’s Recent Greenwashing Interventions (REP 763) significant developments have taken place in the field of sustainability and climate-related financial reporting. The International Sustainability Standards Board (ISSB) has released its inaugural sustainability disclosure standards, setting a global benchmark for transparency in sustainability reporting. Additionally, the Australian Government has proposed the introduction of a mandatory climate-related financial reporting regime, signaling a strong commitment to enhancing the quality of sustainability disclosures across the nation.
In alignment with these global and national initiatives, the Australian Government, under its Sustainable Finance Roadmap, is advancing a series of measures aimed at curbing greenwashing in the market. These measures include a partnership with the Australian Sustainable Finance Institute to develop an Australian sustainable finance taxonomy, as well as the proposed introduction of a sustainable investment product labelling regime.
ASIC’s role will be pivotal in supporting the Government’s implementation of the Sustainable Finance Roadmap, particularly through its participation in the Council of Financial Regulators’ Climate Working Group. Once the mandatory climate reporting regime is implemented, ASIC will be responsible for the administration and enforcement of these new requirements. The commission will work closely with industry stakeholders to ensure that large Australian businesses and financial institutions produce high-quality climate reports, contributing to a more transparent and accountable market.
Moreover, these actions serve as a guiding light to the broader financial sector, including the cryptocurrency industry. As digital assets and blockchain technologies increasingly intersect with sustainable finance, it is essential that crypto platforms and issuers adhere to the same standards of transparency and integrity. ASIC’s enforcement activities underscore the necessity of rigorous governance in all financial markets to maintain investor trust.
The upcoming introduction of mandatory climate-related financial disclosure requirements for large businesses and financial institutions further highlights the need for robust regulatory oversight. ASIC’s continued vigilance against greenwashing not only protects consumers and investors but also reinforces the integrity of the sustainable finance sector. These actions are essential in promoting transparency and accountability, which are foundational to building a sustainable future.
(Source: https://download.asic.gov.au/media/lbygvudn/rep791-published-23-august-2024.pdf, https://treasury.gov.au/sites/default/files/2024-06/p2024-536290.pdf, https://asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-185mr-asic-continues-action-on-misleading-claims-to-deter-greenwashing-misconduct/?altTemplate=betanewsroom)
