Active Super fined $10.5m for greenwashing
Active Super's greenwashing will cost it $10.5 million in civil penalties for misleading members about its ESG credentials purported to eliminate investments in Russian companies and others involved in mining and tobacco, the Federal Court determined this morning.
Justice O'Callaghan said it is not disputed that the super fund's "contraventions were serious" after it benefited from its misleading conduct by misrepresenting the "ethical" nature of a significant part of its investments, following the guilty verdict handed down last June.
This enhanced its ability to attract investors to the fund and enhanced its reputation as a provider of investment funds with ESG characteristics, the judge said.
"As a result, investors lost the opportunity to invest in accordance with their investment values. Further, the contravening conduct continued over an extensive period of time (approximately two and a half years); the likely causes of it were never explained; it concerned substantial investments; it was likely to have led to investors losing confidence in ESG programs..."
Between February 1, 2021 1, and June 30, 2023, the super fund claimed it steered clear of investments in gambling, coal mining, oil tar sands, and Russian companies since the invasion of Ukraine.
For example, an Active Super Responsible Investment report highlighted 'RUSSIA OUT' as a country exclusion. That report revealed that Active Super held investments in Russian stocks through two emerging market funds but begun divesting those securities after the invasion.
It also invested in tobacco and gambling companies such as Skycity Entertainment Group, Aristocrat Leisure, Amcor PLC, and Westrock Co.
Today, Justice O'Callaghan slammed Active Super for its failure to have in place properly functioning systems and processes designed to ensure that its representations were not false or misleading - which should have been the responsibility of senior management.
Further, when confronted with the allegations by ASIC, Active Super "ran a host of contrived arguments in its defence at trial."
Some $3 million of the $10.5 million penalty relate to misrepresentations made on its website, while $2 million was apportioned to misrepresentations in its SRI Policy Statement. About $1.5 million respectively relate to PDS fact sheets published in 2021 and 2022.
Active Super and Vision Super merged on March 1, now home to 165,000 members.
ASIC deputy chair Sarah Court said: "This is a significant penalty that sends a strong message to companies making sustainable investment claims that those claims need to reflect the true position."
"This case demonstrates ASIC's commitment to taking on misleading marketing and greenwashing claims made by companies promoting financial services. It is our third greenwashing court outcome, and we will continue to keep greenwashing in our sights."
ASIC has also been successful after taking greenwashing action on Mercer Superannuation Australia and Vanguard.
This article first appeared on Financial Standard
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