)
Mercer Superannuation (Australia) has been ordered pay an $11.3 million penalty after the financial services group admitted to making misleading statements about the sustainable nature of some of its superannuation products.
The penalty issued by the Federal Court represents a landmark ruling for the Australian Securities and Investments Commission and is among three that the corporate watchdog is prosecuting over allegations of greenwashing. The others comprise actions against Vanguard Investments Australia and Active Super.
ASIC’s deputy chair Sarah Court says the action against Mercer was the first greenwashing case it had brought before the Federal Court, describing it as “a landmark case both for ASIC and for the financial services industry”.
“It demonstrates the importance of making accurate ESG claims to investors and potential investors,” says Court.
The Federal Cort found that Mercer had made misleading statements on its website about seven ‘Sustainable Plus’ investment options offered by the Mercer Super Trust, of which Mercer is the trustee.
ASIC says that these statements marketed the Sustainable Plus options as suitable for members who “are deeply committed to sustainability” because they excluded investments in companies involved in carbon intensive fossil fuels like thermal coal.
Exclusions were also said to apply to companies involved in alcohol production and gambling.
The Court found members who took up the Sustainable Plus options had investments in companies involved in industries the website statements said were excluded.
Among these were 15 companies involved in the extraction or sale of carbon intensive fossil fuels, including AGL Energy, BHP Group, Glencore PLC and Whitehaven Coal.
It also included 15 companies involved in the production of alcohol, among them Budweiser Brewing Company APAC Ltd, Carlsberg AS, Heineken Holding NV and Treasury Wine Estates, as well as 19 companies involved in gambling, including Aristocrat Leisure, Caesar’s Entertainment Inc, Crown Resorts and Tabcorp Holdings.
“Today’s matter is a strong example to the financial services industry of the greenwashing action we will take,” says Court.
“We will continue to monitor the market for ESG-related claims that cannot be validated by evidence to ensure the market is fair and transparent.”
In handing down his decision, Justice Horan has described the contraventions admitted by Mercer as “serious”.
“They arose from failures by Mercer to implement adequate systems to ensure that ESG claims in relation to its superannuation products were accurate, and to monitor and enforce the application of any sustainability exclusions associated with such ESG claims,” he says.
“It is vital that consumers in the financial services industry can have confidence in ESG claims made by providers of financial products and services.?
“As is the case in many other industries, consumers may place great importance on ESG considerations when making investment decisions.
“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.”
Mercer, which last year was slapped with a $12 million penalty after it was found to be wrongly billing thousands of its customers for services that were never provided, has agreed to pay ASIC’s costs.
)
