ASIC hits industry fund with greenwashing charges

Mike Taylor

Managing Editor/Publisher, Financial Newswire

11 August 2023

An industry superannuation, Active Super, has been hit with Australian Securities and Investments Commission (ASIC) civil charges over greenwashing.

ASIC has announced it has commenced civil penalty proceedings in the Federal Court against LGSS Pty Limited (Active Super) alleging misleading conduct and misrepresentations to the market relating to claims it was an ethical and responsible superannuation fund.

It claimed Active Super represented on their website that they eliminated investments that posed too great a risk to the environment and the community, including tobacco manufacturing, oil tar sands and gambling. Active Super also stated that they had added Russia to their list of excluded countries, following the invasion of Ukraine.

ASIC alleges Active Super exposed its members to investments it claimed to restrict or eliminate.

Commenting on the move, ASIC Deputy Chair Sarah Court said, “There is much competition among super funds for new members, and we know that funds seek to attract members with promises their investments will not be exposed to certain industries. When making these claims super funds must have evidence to back their claims and ensure they are not promising exclusions that they cannot guarantee.’”

From 1 February 2021 to 30 June 2023, ASIC alleges that Active Super held 28 holdings, either directly or indirectly, which exposed members to securities it claimed to restrict. Some of the holdings included:

• Gambling: Skycity Entertainment Group Limited, PointsBet Holdings Limited, The Star Entertainment Group Limited, The Lottery Corporation Limited and Tabcorp Holdings Limited;
• Tobacco: Amcor PLC;
• Russian entities: Gazprom PJSC and Rosneft Oil Company;
• Oil Tar Sands: ConocoPhillips;
• Coal Mining: Coronado Global Resources Inc., New Hope Corporation Limited and Whitehaven Coal Limited.

ASIC also alleges that following the commencement of the war in Ukraine in February 2022, Active Super made representations from May 2022 that it would stop investments in Russian companies even though Active Super had holdings in Russian securities, which remained in place as at 30 June 2023.

ASIC alleges ESG misrepresentations were made on Active Super’s website, disclosure documents and on Facebook, Instagram and LinkedIn.

This is ASIC’s third greenwashing civil penalty proceeding after ASIC recently took action against Mercer Super and Vanguard Investments Australia.

ASIC is seeking declarations, pecuniary penalties, adverse publicity orders and an injunction against Active Super from the Court.

The date for the first case management hearing is yet to be scheduled.

In a brief response to the ASIC announcement, Active Super said it had co-operated with ASIC’s investigation and welcomes increased scrutiny on ESG disclosure standards as being good for members, the super industry and the community.

“As the matter is before the courts we are unable to comment further,” it said.