Mercer faces $11.3m penalty over greenwashing

Augusr 7th, 2024

The Australian Securities and Investments Commission’s (ASIC) case against Mercer Superannuation (Australia) has led to the Australian Federal Court fining the firm $11.3 million.

In the landmark case, ASIC’s first greenwashing case to be brought before the Federal Court, Mercer admitted it made misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.

Mercer’s seven ‘Sustainable Plus’ investment options were marketed as suitable for investors who “are deeply committed to sustainability”.

The website stated the Sustainable Plus options excluded companies involved in carbon intensive fossil fuels like thermal coal, alcohol production and gambling.

However, the court found that investors who selected the Sustainable Plus options had investments in companies involved in industries that were supposed to be excluded.

These included 15 companies involved in the extraction or sale of carbon intensive fossil fuels, such as AGL Energy Ltd, BHP Group Ltd, Glencore PLC and Whitehaven Coal Ltd.

The funds also had investments in 15 companies involved in the production of alcohol and 19 companies involved in gambling.

When handing down his decision, Justice Horan said: “It is vital that consumers in the financial services industry can have confidence in ESG claims made by providers of financial products and services.

“Any misrepresentations in relation to ESG policies or practices associated with financial products or services, whether as an aspect of “greenwashing” practices or otherwise, undermines that confidence to the detriment of consumers and the industry generally.”

ASIC deputy chair Sarah Court said the ruling demonstrated the importance of making accurate ESG claims to investors and potential investors.

She added that ASIC would continue to monitor the market for ESG-related claims that cannot be validated by evidence to ensure it is fair and transparent.

Minerva’s blog focuses on the latest developments in ESG investing and stewardship. Minerva is a global provider of sustainable stewardship solutions with over 25 years of expertise. Minerva empowers investors by providing essential tools, including ESG research and data, enabling them to navigate the intricate landscape of stewardship and proxy voting, whilst ensuring their decisions are well-informed and aligned with sustainable principles.