As enforcement action against “greenwashing” (misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical) is a current ASIC priority, it has been monitoring financial markets for misleading claims about sustainability-related investments.
ASIC has announced that it has issued three infringement notices to investment manager Vanguard Investments Australia Ltd (Vanguard) against alleged greenwashing.
Vanguard paid $39,960 in compliance with the infringement notices on 1 December 2022. Payment of an infringement notice is not an admission of guilt or liability.
ASIC was concerned that Product Disclosure Statements for the Vanguard International Shares Select Exclusions Index Funds (the Vanguard Funds) may have been liable to mislead the public by overstating an exclusion, otherwise known as an investment screen, which claimed to prevent investment in companies involved in significant tobacco sales.
The Vanguard Funds were structured to exclude certain investments in tobacco, however, while this screen applied to exclude producers and manufacturers of cigarettes and other tobacco products, it did not exclude companies involved in the sale of tobacco products.
ASIC’s Information Sheet (INFO 271) How to avoid greenwashing when offering or promoting sustainability-related products provides information about misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical for responsible entities of managed funds, corporate directors of corporate collective investment vehicles (CCIVs), and trustees of registrable superannuation entities (issuers).
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
