ASIC sues Mercer Super in greenwashing crackdown

Mercer Superannuation is the first company being dragged to court by the Australian Securities and Investments Commission for allegedly making misleading statements about the sustainability of some of its investment options, as the regulator looks to crack down on greenwashing.

In a media release on Tuesday, ASIC announced it was commencing civil penalty proceedings in the Federal Court against the super fund for greenwashing – a move which the regulator’s deputy chair Sarah Court said reflected a growing area of concern. Greenwashing is when companies overstate or lie about their green credentials.

“There is increased demand for sustainability-related financial products, and with that comes the growing risk of misleading marketing and greenwashing,” she said. “If financial products make sustainable investment claims to investors and potential investors, they need to reflect the true position.”

ASIC alleges Mercer made misleading statements on its website about the nature and characteristics of the “Sustainable Plus” investment options offered by the Mercer Super Trust, of which Mercer is the trustee.

The Sustainable Plus options were marketed as suitable for members who “are deeply committed to sustainability” because they excluded investments in companies involved in carbon intensive fossil fuels like thermal coal.

But ASIC alleged members who took up the Sustainable Plus options had investments in industries the website statements said were excluded. This included investments in 15 companies involved in the extraction or sale of carbon intensive fossil fuels, such as AGL Energy, BHP and Whitehaven Coal.

Mercer also stated that the Sustainable Plus options excluded investments in companies involved in alcohol production and gambling. However, ASIC alleged it found investments in 15 companies involved in the production of alcohol and 19 companies involved in gambling.

ASIC said these statements and investments amounted to Mercer engaging in conduct that could mislead the public, and that it sought declarations and financial penalties from the court. It is also seeking injunctions preventing Mercer from continuing to make the alleged misleading statements on its website and orders requiring Mercer to publicise any breaches found by the court.