Have you checked your "socials"? Social media in the mix as ASIC issues infringement notice for greenwashing

Demonstrating its continued focus on greenwashing, the Australian Securities and Investments Commission (ASIC) has issued an infringement notice to self-styled ethical and sustainable Future Super Investment Services Pty Ltd, promoter of the Future Super Fund (Future Super), alleging Future Super engaged in greenwashing practices by overstating the positive environmental impact of the fund.¹

Greenwashing is one of ASIC's 2023 enforcement priorities. This infringement notice issued to Future Super signals yet another warning to the financial services industry that the corporate regulator is ready and willing to penalise and, if necessary, prosecute companies that engage in greenwashing practices.

ASIC alleges Future Super engaged in greenwashing conduct by publishing a Facebook post on or around 29 May 2019 which remained on its Facebook page until October 2022 and, amongst other things, claimed: “Naysayers don’t join together to move nearly $400 million out of fossil fuels.”

ASIC alleged the Facebook post overstated the positive environmental impact of the fund and, in doing so, represented that the fund's services were of a particular quality which was false or misleading and in contravention of the ASIC Act 2001 (Cth).²

In ASIC's view the post conveyed that Future Super had moved nearly $400 million out of fossil fuel investments at a time when the total funds under management was approximately $400 million.³ ASIC was of the view that the statement was misleading and that Future Super had no basis upon which to represent that the entirety of funds under management had been invested in fossil fuels prior to being invested in the fund.

The Facebook post was taken down around 25 October 2022. Future Super paid the $13,320 infringement notice penalty on 27 April 2023, albeit with no admission of guilt or liability.⁴

This infringement notice being issued follows ASIC's commencement of proceedings against Mercer Superannuation (Australia) Limited in the Federal Court of Australia in February 2023 in respect of allegations Mercer made misleading statements and engaged in conduct that could mislead the public about the sustainability of some of its superannuation investment options offered on its website.

Future Super has stated publicly that it self-reported to ASIC after it realised the statement was "missing an important caveat".⁵ Nevertheless, it is clear greenwashing remains one of ASIC's major priorities and ASIC is continuing to demonstrate that it will be actively monitoring companies and taking action accordingly. ASIC has now issued over $150,000 in infringement notices regarding greenwashing since October 2022, including against Tlou Energy Limited, Vanguard Investments Australia, Diversa Trustees Limited and Black Mountain Energy.⁶

ASIC's commitment to taking a tough approach to greenwashing has been reinforced this week by Assistant Treasurer and Financial Services Minister Stephen Jones who, in a speech to the annual conference of the Australian Superannuation Investors, restated the government's commitment to deterring greenwashing misconduct referring to the government's $4.3m investment for ASIC to increase its surveillance of suspected greenwashing by listed companies, superannuation funds and investment managers.⁷

Key lessons

• Superannuation funds and financial services industry organisations more broadly should carefully review any current and historical statements made in communications including marketing material, social media and websites, in addition to more formal statements in annual reports and other communications to customers, investors or members (in the case of superannuation funds).
• ASIC Deputy Chair, Sarah Court, said in respect of the infringement notice: "This action should send a message to the financial services industry that ASIC is continuing to focus on greenwashing broadly, in statements to the market, disclosure documents, marketing material and on social media. Industry using social media to promote green claims are not immune from ASIC action."⁸
• Statements made about ethical or sustainability practices or achievements must be supported by evidence to avoid the risk of regulatory prosecution and the consequential reputational damage that inevitably follows such an event. As stated by Ms Court: "[ASIC] expect the industry to be able to stand by their sustainability statements and back these up with evidence."⁹
• Now is the time, if not done already, to ensure that any current or historical claims made to customers, investors, members and the public at large can be substantiated.

For further information or advice in respect of financial services regulation compliance and regulatory investigations, please contact Sarah Fregon and Mark Lindfield.

¹ Media release: ASIC issues infringement notice to superannuation fund promoter for greenwashing.

² Sub-section 12DB(1)(a) Australian Securities and Investments Commission Act (Cth) 2001.

³ ASIC infringement notice: Future Super.

⁴ Media release: ASIC issues infringement notice to superannuation fund promoter for greenwashing.

⁵ "Future super promoter cops greenwashing fine for misleading ad".

⁶ Media release: ASIC issues infringement notice to superannuation fund promoter for greenwashing.

⁷ "Future super promoter cops greenwashing fine for misleading ad".

⁸ Media release: ASIC issues infringement notice to superannuation fund promoter for greenwashing.

⁹ Ibid.

Image by Joel Peel on Unsplash.