Australian Regulator Accuses Mercer Super of Greenwashing

In its first legal action against alleged greenwashing, the Australian Securities and Investments Commission accused Mercer Superannuation Limited of misleading its participants about the sustainability of some of its investment options.

The ASIC launched civil penalty proceedings in Australia’s Federal Court and says statements the pension fund made about the sustainable nature and characteristics regarding some of its superannuation investment options were misleading.

In particular, the regulator alleges Mercer made misleading statements on its website about seven “Sustainable Plus” investment options offered by the Mercer Super Trust. The regulator said Mercer’s statements marketed the options as excluding investments in companies involved in carbon-intensive fossil fuels like thermal coal, and therefore suitable for members who “are deeply committed to sustainability.” Mercer also allegedly said on its website that the exclusions also applied to companies involved in alcohol production and gambling.

However, the ASIC alleges that the Sustainable Plus investments include investments in companies involved in the fossil-fuel, alcohol-production and gambling industries.

The regulator said 15 companies were involved in the extraction or sale of carbon-intensive fossil fuels, including AGL Energy, BHP Group, Glencore and Whitehaven Coal. Another 15 companies were involved in alcohol production, including Budweiser Brewing Company, Carlsberg, Heineken and Treasury Wine Estates. A further 19 companies were involved in gambling, including Caesar’s Entertainment Inc, Crown Resorts Limited and Tabcorp Holdings.

‘There is increased demand for sustainability-related financial products, and with that comes the growing risk of misleading marketing and greenwashing,” ASIC Deputy Chair Sarah Court said in a release. “If financial products make sustainable investment claims to investors and potential investors, they need to reflect the true position. If investments in certain industries like fossil fuels are said to be excluded, this promise must be upheld.”

The ASIC said it is seeking declarations and pecuniary penalties, as well as injunctions preventing Mercer from continuing to make any of the allegedly misleading statements on its website. IT also seeks orders requiring Mercer to publicize any contraventions found by the court.

‘This is the first time ASIC has taken an Australian entity to court regarding alleged greenwashing conduct,” Court said in the release. “It reflects our continuing efforts to ensure sustainability-related claims made by financial institutions are accurate.’

A spokesperson for Mercer, the trustee of the Mercer Super Trust, said in an emailed statement that the company has cooperated with ASIC in its investigation and that it “will continue to carefully consider ASIC’s concerns with respect to this matter,” adding that “it would be inappropriate to comment further as the matter is now before the courts.”