The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings in the Federal Court against Mercer Super for allegedly making misleading statements regarding the sustainable nature of its investment options.
ASIC alleged Mercer made statements on its website about seven ‘Sustainable Plus’ investment options offered by the Mercer Super Trust which marketed these options as suitable for members who were ‘deeply committed to sustainability’ as it would exclude investments in companies involved in carbon intensive fossil fuels, gambling, and alcohol production.
The options would allow members to blend options to suit their needs and promised a higher proportion of sustainability-themed assets.
However, this was found to not be the case as some of the investments of members who took up the ‘Sustainable Plus’ option included:
- 15 companies involved in the extraction or sale of carbon intensive fossil fuels (including AGL Energy Ltd, BHP Group Ltd, Glencore PLC and Whitehaven Coal Ltd);
- 15 companies involved in the production of alcohol (including Budweiser Brewing Company APAC Ltd, Carlsberg AS, Heineken Holding NV and Treasury Wine Estates Ltd); and
- 19 companies involved in gambling (including Aristocrat Leisure Limited, Caesar’s Entertainment Inc, Crown Resorts Limited and Tabcorp Holdings Limited).
In doing so, ASIC alleged Mercer engaged in conduct that could mislead the public.
“This is the first time ASIC has taken an Australian entity to court regarding alleged greenwashing conduct, and it reflects our continuing efforts to ensure sustainability-related claims made by financial institutions are accurate,” ASIC Deputy Chair Sarah Court said.
“There is increased demand for sustainability-related financial products, and with that comes the growing risk of misleading marketing and greenwashing.
“If financial products make sustainable investment claims to investors and potential investors, they need to reflect the true position. If investments in certain industries like fossil fuels are said to be excluded, this promise must be upheld.”
Action against greenwashing was one of ASIC’s 2023 Enforcement Priorities. Till date, it has issued over $140,000 in infringement notices in response to concerns about alleged greenwashing, which included Vanguard Investments Australia and Diversa Trustees Limited.
This proceeding would also be the first time ASIC has commenced court action after legislative amendments, arising from the Financial Services Royal Commission, enhanced ASIC’s powers to take action regarding a broader range of superannuation trustee conduct.
ASIC would seek declarations and pecuniary penalties from the Court. It would also seek injunctions preventing Mercer from continuing to make any of the alleged misleading statements on its website, and orders requiring Mercer to publicise any contraventions found by the court.
The date for the first case management hearing was yet to be scheduled by the Court.
