$14b super fund misled investors by greenwashing, court finds

The Federal Court ruled that Active Super misled investors by falsely claiming to eliminate exposure to gambling, coal, oil tar sands, and Russian companies. This judgment serves as a significant victory for the Australian Securities and Investments Commission in its ongoing crackdown on greenwashing, confirming that the fund continued investing in these prohibited sectors despite explicit promises to the contrary. The ruling emphasizes that financial institutions cannot rely on technical disclaimers or partial definitions to justify misleading marketing. When funds make clear representations to attract members based on ethical or sustainable criteria, they must substantiate those claims with actual investment practices. The court rejected the fund’s defense, establishing that such statements are promotional and must be truthful to maintain consumer trust. This case is highly relevant to greenwashing as it sets a strict precedent for accountability in environmental, social, and governance disclosures. By securing its third consecutive win against major superannuation funds, the regulator signals that misleading claims about ethical investments will face severe consequences. This reinforces the necessity for transparency and accuracy in sustainable finance, warning the industry that misrepresenting investment strategies carries serious legal and reputational risks.

Source: smh.com.au
Published on 2024-06-06

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