The Federal Court has ordered superannuation trustee Mercer Superannuation (Australia) Limited (Mercer) pay a landmark $11.3 million pecuniary penalty for greenwashing which contravened sections 12DF(1) and 12DB(1)(a) of the Australian Securities and Investments Commission Act 2001 (Cth).
Through the promotion of its Sustainable Plus Options offered in the Mercer Super Trust, Mercer was found to have made false or misleading representations and engaged in conduct that was liable to mislead the public in relation to the provision of a financial service.
Mercer represented that its Sustainable Plus Options excluded investments involved in, or deriving profit from, the production or sale of alcohol, gambling, and the extraction or sale of carbon intensive fossil fuels. However, it was found that the Sustainable Plus Options included investments in all three of these industries.
Justice Horan labelled these misrepresentations by Mercer as “greenwashing” conduct, that is:
“[Conduct] which broadly speaking involves making false or misleading environmental or sustainability claims to in order to make a company or its business appear more environmentally friendly, sustainable or ethical particularly in order to induce customers to purchase its products or services or to invest in the company.”
Mercer made these misrepresentations through statements and videos published on the Mercer website as well as on other platforms including Vimeo and YouTube. Justice Horan found that:
When Mercer became aware of articles reporting on its greenwashing conduct it took limited corrective action with respect to some of the misleading statements. It was only after ASIC had commenced proceedings against Mercer that it then completed a full review in order to ensure all misleading statements had been removed from all sites and platforms.
The issue of this penalty against Mercer serves as a cautionary reminder for companies to ensure they have processes and procedures in place to ensure they make only accurate representations in respect of their products, services and Environmental, Social, and Governance (ESG) credentials. This also extends to less formal forms of communications with potential consumers such as promotional videos and general advertising.
This Federal Court ruling comes at a time when investors and consumers are increasingly basing their financial and investment decisions with a reliance on companies’ ESG claims and credentials. This significant penalty issued by the Federal Court to Mercer highlights the serious consequences for those companies engaging in greenwashing conduct. Such conduct has the potential to undermine investor and consumer confidence and will likely attract serious penalties as a result.
Thank you to Freya Surma-Litchfield, Law Graduate, for her valuable research and assistance with this article.
