In 2023, the Australian Securities and Investments Commission sued Active Super, a superannuation (pension) fund, stating the fund had made misleading claims about its environmental, social, and governance credentials.
Reuters is now reporting that the courts have handed down a judgment in the ESG case, ordering Active Super to pay $6.7 million in penalties.
What's happening?
Active Super claimed that it had divested from such investments as gambling, oil tar sands, Russian investments, and more, as these were restricted or eliminated by strict ESG investment screens.
However, the Australian Securities and Investments Commission challenged these claims in court, with the court finding Active Super was still involved with a coal mining company, a gambling company, and a Russian firm, among others.
The court found Active Super guilty in 2024 but only recently determined the fund would need to pay $6.7 million in penalties.
Reuters reported that the judge, Justice O'Callaghan, said, "LGSS benefited from its misleading conduct by misrepresenting the 'ethical' nature of a significant part of its investments, which on any view enhanced its ability to attract investors to the Active Super fund."
This win marks the Australian Securities and Investments Commission's third win in greenwashing civil penalty actions, as it previously won judgments against Mercer Super and Vanguard Investment.
Why is greenwashing concerning?
Active Super isn't the first fund to exaggerate its green bona fides. Unfortunately, investors have discovered that companies across the globe have engaged in greenwashing.
While greenwashing doesn't always cause financial loss for investors, the act still causes harm.
By misleading investors and consumers, companies engaging in this practice cause investors to develop a lack of trust in ESG programs and sustainability efforts. Companies profit when they attract investors with greenwashed claims, but it leads investors to lose opportunities to invest according to their values.
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Definitely 👍 Greenwashing also harms the environment by promoting misleading solutions for helping to combat an ever-changing climate.
What can I do about greenwashing?
While doing away with greenwashing will depend in large part on government and activist work, individuals can do their part.
By learning more about what constitutes greenwashing versus actual sustainable practices, consumers can make better-informed decisions about the products they use and the companies they invest in.
Consumers can also seek out accountability and transparency from companies by doing their best to determine whether what companies say they're doing matches actual data points.
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