Both ASIC and the ACCC have begun 2023 with a strong focus on penalising “greenwashing” conduct, which refers to when a company misleads consumers as to its environmental or sustainability bona fides through statements or conduct.
This follows on from ASIC’s publication of INFO 271 (“How to avoid greenwashing when offering or promoting sustainability-related products”) in June 2022 (see our summary of this guidance here), and the new ACCC chair highlighting greenwashing as a priority area in a speech in November 2022. The ACCC also released a report on 2 March 2023 following an internet sweep of environmental claims made by 247 businesses – an article outlining the key findings of this report from Addisons’ Food and Grocery Team can be found here.
In October 2022, ASIC deputy chairman Sarah Court noted to the House of Representatives economics committee that ASIC was conducting several investigations in respect of greenwashing conduct. Since that time to January 2023, ASIC has issued over $140,000 in infringement notices for alleged greenwashing. This includes notices issued to:
- two energy companies (Tlou Energy Limited and Black Mountain Energy Limited) in relation to “low” or “net-zero” emissions statements contained in their ASX announcements; and
- an investment manager (Vanguard Investments Australia Ltd) and a superannuation trustee (Diversa Trustees Limited) for overstating investment screens and exclusions, in particular, that members’ funds would not be invested in polluting or carbon intensive activities or other potentially socially harmful industries such as tobacco production.
Following the issue of these infringement notices, on 28 February 2023, ASIC launched its first court action against alleged greenwashing conduct by commencing civil penalty proceedings against Mercer Superannuation (Australia) Limited (Mercer) in the Federal Court. These proceedings highlight that it is not only energy and resource companies that are in ASIC’s crosshairs, but it will also target investment bodies and other corporate entities that it considers are being careless with their environmental and sustainability claims.
In providing its superannuation product, Mercer allowed members to “mix and match” their super investment options across a range of criteria, including the “Sustainable Plus Investment Options” which were marketed towards environmentally-conscious members as they excluded investments in companies involved in fossil fuels, as well as alcohol production and gambling. However, ASIC claims that despite statements to this effect on Mercer’s website, members who took up this option nonetheless had their funds invested in up to 15 companies involved in such industries, including AGL Energy, BHP Group, Budweiser Brewing Company and Crown Resorts Limited.
ASIC alleges that the fact that members’ funds were invested in these companies means that statements made by Mercer were false and misleading, and that Mercer engaged in conduct that could mislead the public. Under these proceedings, ASIC is seeking declarations and pecuniary penalties, in addition to prohibitory injunctions on the statements made on Mercer’s website.
The concurrent focus by Australia’s two key corporate regulators (ASIC and ACCC) on greenwashing means it is more important than ever for businesses to review all environmental and sustainability-related statements made while marketing their products and services. This is particularly the case for entities conducting their business internationally, with stronger regulations set to be put in place by the European Commission in 2023, starting with a draft ‘anti-greenwashing’ law to be proposed this month. In Australia, both ASIC and the ACCC have indicated that there are further investigations underway and they intend to act strongly against greenwashing conduct.