Super funds and managers face tougher greenwashing standards as ASIC intensifies action

John Moutsopoulos, a partner at Mills Oakley, has expressed concerns over the increasing regulatory risks associated with greenwashing in the financial sector. He highlighted the Australian Securities and Investments Commission s (ASIC) rigorous examination of sustainability claims, including vague terms, investment screens, and net zero statements. Moutsopoulos warned that ASIC s actions could lead to significant penalties for super funds and fund managers with public-facing sustainability profiles. In the past 15 months, ASIC has made nearly 50 regulatory interventions against greenwashing, resulting in over $123,000 in infringement notice payments. The commission has also imposed an $11.3 million penalty on Mercer Super. Moutsopoulos observed that this scrutiny is causing some entities to reconsider or even reduce their voluntary sustainability-related disclosures. Moutsopoulos advised fund managers to proactively assess and strengthen their greenwashing risk management strategies. He emphasized that greenwashing risk is a material regulatory risk, and there is no safe harbor available. ASIC is currently the plaintiff, and they do not need to prove any investor loss to claim greenwashing. Looking ahead, Moutsopoulos warned that ASIC might expand its focus to include licence obligations, director duties, and other regulatory responsibilities. He also highlighted the potential for class actions if investor losses occur. Moutsopoulos criticized Australia s voluntary disclosure or opt-in framework, stating that it will likely fall short for super funds and fund managers. He advised them to closely monitor public claims like net zero pledges and implement appropriate disclaimers to better communicate their sustainability strategies to investors. Finally, Moutsopoulos pointed out that Australia s evolving sustainability regulations, such as the sustainable finance strategy and product labelling laws, may affect how ESG integration is perceived. He stressed the importance of transparency in disclosures about what entities mean by ESG integration to

Source: investordaily.com.au
Published on 2024-09-13