Super fund hauled before court over greenwashing claims

Mibenge Nsenduluka | February 28, 2023

Australia’s corporate watchdog has launched landmark legal action against Mercer, accusing the superannuation giant of greenwashing its investments.

The Australian Securities and Investments Commission has started civil proceedings in the Federal Court, alleging Mercer made false and misleading statements about the sustainable nature of some of its investment options.

ASIC claims Mercer made statements on its website about various “sustainable plus” investment options, which excluded companies involved in carbon-intensive fossil fuels such as thermal coal as well as organisations linked to alcohol and gambling.

However, members who took up the option had investments in companies involved in each of the industries the website said were excluded.

Those companies included AGL Energy, BHP Group, Budweiser Brewing Company and Crown Resorts. 

As well as pursuing financial penalties and public declarations, the watchdog will also seek an injunction preventing Mercer from making any other alleged misleading statements.

The date for the first case management hearing has not yet been set. 

A Mercer spokeswoman said the company had cooperated with ASIC throughout its investigation.

“Mercer will continue to carefully consider ASIC’s concerns with respect to this matter,” the spokeswoman told AAP in a statement.

“It would be inappropriate to comment further as the matter is now before the courts.”

ASIC deputy chairwoman Sarah Court said the agency was committed to ensuring corporate sustainability claims were accurate.

“There is increased demand for sustainability-related financial products and with that comes the growing risk of misleading marketing and greenwashing,” she said. 

In a 2022 analysis by Market Forces, Mercer was among eight of 11 major super fund investment options labelled sustainable or socially responsible but potentially misleading.

Market Forces superannuation funds campaigner Brett Morgan commended ASIC and said the corporate sector had been put on notice.

“Greenwashing needs to be stamped out because it’s undermining real climate action and potentially misleading millions of super fund members,” he said.

Last year, the Albanese government announced big businesses would be forced to divulge their efforts to cut greenhouse gas emissions and manage climate risk under green investment rules.

Treasurer Jim Chalmers said an Australian climate risk disclosure framework would help boost investment in clean energy and other infrastructure needed to transition to a sustainable, low-carbon economy.

ASIC’s move comes after legal changes two years ago that followed the banking and financial services royal commission.

The new laws enhanced ASIC’s powers to take action on broader superannuation trustee conduct.

In 2021, ASIC did a review to establish whether the practices of funds that offer sustainable products aligned with their promotion of these products.

The Australian Competition and Consumer Commission has also been on high alert for greenwashing as part of a broader crackdown on misleading products and services.

One of Australia’s biggest oil and gas companies, Santos, was accused of greenwashing its clean energy claims last year.

The Australasian Centre for Corporate Responsibility launched proceedings in Federal Court against the gas giant, claiming the company engaged in misleading or deceptive conduct in its 2020 annual report.

In December, investment firm Vanguard Australia was fined $39,960 for greenwashing over investments meant to exclude cigarette and tobacco sales.

ASX-listed energy company Tlou Energy was forced to pay $53,280 in October after being slapped with four infringement notices on alleged false or misleading sustainability-related statements made to the market.