The Federal Court has ordered Mercer Superannuation (Australia) Limited to pay a $11.3 million penalty for greenwashing claims.
The court ruled in this landmark case brought by the Australian Securities and Investments Commission (ASIC) that Mercer made misleading statements about the sustainable nature of some of its investment options.
Why does it matter? This is the first greenwashing proceeding to result in a court-ordered penalty in Australia.
Mercer accused of greenwashing
The court ruled that Mercer made “false or misleading” environmental, social, and governance (ESG) claims about seven Sustainable Plus investment options offered by the Mercer Super Trust.
Mercer claimed that these investment options excluded companies that made a profit from either the production or sale of alcohol, gambling, and carbon-intensive fossil fuels.
However, it came to light that members who took up the Sustainable Plus options had investments in several companies which were meant to be excluded:
- 15 companies associated with the extraction or sale of carbon-intensive fossil fuels,
- 15 involved in the production of alcohol, and
- 19 linked to gambling.
Judgement
ASIC deputy chair Sarah Court says this case “demonstrates the importance of making accurate ESG claims to investors and potential investors.”
Meanwhile, Justice Christopher Horan states serious contraventions arose “from failures by Mercer to implement adequate systems to ensure ESG claims in relation to its superannuation products were accurate.”
In addition to the $11.3 million penalty, Mercer was ordered to publish an adverse publicity notice on its website and pay ASIC’s costs of $200,000.
Mercer admitted to the contraventions and agreed to resolve the proceedings with ASIC.
Greenwashing cases
Gilbert and Tobin Law says the judgement is significant because “it represents the pecuniary penalty that has been ordered by a court in relation to greenwashing proceedings commenced by a regulator in Australia, as opposed to infringement notices being issued by ASIC on an administrative basis.”
ASIC says it will continue to take action against greenwashing. Current pending cases include Vanguard Investments Australia and Active Super concerning similar misleading practices.
“[The] case shows our commitment to taking on misleading marketing and greenwashing claims made by companies in the financial services industry. It sends a strong message to companies making sustainable investment claims that they need to reflect the true position.”
The judgement can be perused here.
Image: Sergei Tokmakov/Pixabay
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Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.
