• $7.4M Penalty: Mercer fined for misleading ESG claims.
• First ASIC Greenwashing Case: Landmark ruling emphasizes accurate ESG claims.
• Misleading Investment Options: Investments in excluded industries found.

In a landmark ruling, Australia’s Federal Court ordered Mercer Superannuation (Australia) Limited to pay an $7.4 million penalty for misleading claims about the sustainability of its superannuation investment options.

Mercer admitted to making false statements about the ‘Sustainable Plus’ options on its website. These options were marketed as suitable for members deeply committed to sustainability, claiming to exclude investments in carbon-intensive fossil fuels, alcohol production, and gambling.

The Court found Mercer held investments in companies involved in:

• Carbon-intensive fossil fuels, including AGL Energy Ltd and BHP Group Ltd.
• Alcohol production, such as Heineken Holding NV and Treasury Wine Estates Ltd.
• Gambling, including Aristocrat Leisure Limited and Tabcorp Holdings Limited.

ASIC Deputy Chair Sarah Court stated, “This was ASIC’s first greenwashing case brought before the Federal Court; 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.”

Justice Horan highlighted the seriousness of Mercer’s contraventions, attributing them to inadequate systems ensuring the accuracy of ESG claims. He stressed the vital role of consumer confidence in ESG claims, noting, “Any misrepresentations…undermine that confidence to the detriment of consumers and the industry generally.“

This case is part of ASIC’s broader initiative against greenwashing. Other actions include cases against Active Super and Vanguard Investments. ASIC Chair Joseph Longo has emphasized the regulator’s commitment to ensuring fair and transparent markets, warning fund providers about the consequences of misleading sustainability claims.

Related Article: ESMA Recommends Enhancements to EU Sustainable Finance Framework to Combat Greenwashing and Improve Investment Clarity

Following the judgement, Court added, “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.”

Mercer Super has agreed to pay ASIC’s costs, concluding this landmark case in ASIC’s ongoing battle against greenwashing in the financial services industry.