Expect super greenwashing investigations on the horizon: ASIC

Mercer Super could be the first of several greenwashing penalties given to superannuation funds, according to Australian Securities and Investments Commission (ASIC) commissioner Danielle Press.

Earlier this year, ASIC commenced civil penalty proceedings against Mercer Super for allegedly making misleading statements about 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.

According to a report by the Australian Financial Review, the regulator was already investigating other funds for similar problems which had been reported to it by the public.

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“I suspect that [those investigations] will result in court action and if they don’t result in court action, they’ll result in certainly infringement notice action,” she told the title. 

She noted super funds were receiving extra scrutiny from the regulator as it was a compulsory measure and sustainability was particularly attractive to younger members of a fund. 

A report by the Responsible Investment Association of Australasia (RIAA) last year found 72% of people reporting concerns about greenwashing and a further 74% said they would switch super fund if their current fund was investing in companies engaged in activities inconsistent with their values.

Some three-quarters said they wanted to know what their fund was invested in.

Press said: “Whilst people have choice within that space, they don’t have a choice not to contribute…so that absolutely adds to the need to ensure that super funds are acting to a higher standard and to a [members’] best interest standard”.

The ASIC commissioner also referenced the Government’s environmental, social and governance (ESG) consultation, which was announced by Treasurer Jim Chalmers last December, and said climate disclosure would have to be another focus for funds.

The internationally-aligned framework would ensure large business and financial institutions were providing more information and greater transparency on how they were responding to climate change and supporting the transition to net zero.