While some investment screens were applied by CFS, they were more specific and implemented on a more limited basis than CFS’ website had suggested.
The Australian Securities and Investments Commission has taken further action against alleged greenwashing by issuing an infringement notice to superannuation trustee Diversa Trustees Limited.
Greenwashing is the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical and is an enforcement priority for ASIC.
Diversa’s Cruelty Free Super (CFS)
Diversa is the issuer of superannuation product Cruelty Free Super (CFS), as trustee for Professional Super, a sub-fund of the Tidswell Master Superannuation Plan.
Cruelty Free Super’s website contains statements that the regulator found may have been false or misleading by overstating exclusions, otherwise known as investment screens, including claiming to prevent investment in companies involved in ‘polluting and carbon intensive activities’, ‘financing or support of activities which cause environmental and social harm’ and ‘poor corporate governance’.
While some investment screens were applied by CFS, they were more specific and implemented on a more limited basis than CFS’ website had suggested.
ASIC Deputy Chair Sarah Court said: “ASIC had concerns that the statements made regarding CFS were too broad, potentially misleading consumers as to the extent of the investment screening being implemented. As consumers increasingly look to more sustainable and ethical investing, including via their superannuation, ASIC wants to make sure funds have the evidence to back their claims and are not promising exclusions that they can’t guarantee.”
Diversa paid $13,320 in compliance with the infringement notices on 22 December 2022. Payment of an infringement notice is not an admission of guilt or liability. The specific reasons for ASIC’s concerns are set out in the infringement notice which has been published on the Credit and ASIC Act infringements notices register.
ASIC fined Vanguard $39,960 for greenwashing
In December 2022, Vanguard Investments Australia Ltd paid $39,960 in infringement notices. According to the financial watchdog, the Product Disclosure Statements for the Vanguard International Shares Select Exclusions Index Funds (the Vanguard Funds) may have been liable to mislead the public by overstating an exclusion, otherwise known as an investment screen, claimed to prevent investment in companies involved in significant tobacco sales.
The Vanguard Funds were structured to exclude certain investments in tobacco, however, while this screen applied to exclude manufacturers of cigarettes and other tobacco products, it did not exclude companies involved in the sale of tobacco products.
ASIC has made enforcement action against greenwashing a priority as ESG investing goes mainstream. Greenwashing is the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable, or ethical.
