Promoting Transparency in Sustainable Investments

The Australian Securities and Investments Commission (ASIC) recently released a short report highlighting its efforts to combat greenwashing in the financial industry. The report covers the period from July 2022 to March 2023, during which ASIC undertook 35 interventions to address misleading claims made by listed companies, managed funds, and superannuation funds regarding their environmental, social, and governance (ESG) credentials. In this blog post, we will delve into the key findings of the report, ASIC's interventions, and their significance in promoting fair and transparent markets.

Identifying Misleading Disclosures

ASIC Deputy Chair Karen Chester emphasised the importance of disclosing "how and why" ASIC took action against greenwashing. All 35 interventions were carried out following the release of ASIC's "How to avoid greenwashing" information sheet in June of the previous year. The interventions encompassed a range of regulatory actions, including securing timely corrections, issuing public infringement notices, and initiating civil penalty proceedings, with the ultimate goal of protecting retail investors and financial consumers from being misled about the "green credentials" of investments and listed companies.

Key Outcomes of ASIC's Interventions

During the specified period, ASIC's interventions yielded significant outcomes:

  1. 23 instances resulted in corrective disclosure outcomes, ensuring the correction of misleading claims.
  2. 11 infringement notices were issued, providing public accountability for non-compliant entities.
  3. In one case, civil penalty proceedings were initiated, demonstrating the seriousness with which ASIC regards greenwashing practices.

Promoting Transparency and Market Education

Ms. Chester highlighted the importance of transparency and market education as key elements in the fight against greenwashing. The report serves as a valuable resource for market participants, shedding light on the specific areas where ASIC intervened. These areas included net zero statements and targets, the use of terms such as "carbon neutral," "clean," or "green," fund labels, and the scope and application of investment exclusions and screens. By disclosing the nature of its interventions, ASIC aims to inform the market about the pitfalls of greenwashing and guide stakeholders in making more informed decisions.

Guidance for Issuers and Advisers

ASIC urges issuers and advisers to consider the report alongside Information Sheet 271, titled "How to avoid greenwashing when offering or promoting sustainability-related products." This document provides guidance on complying with regulatory settings and avoiding misleading and deceptive practices. It is essential for sustainability-related disclosures to have reasonable grounds and comply with the law. By incorporating the insights from ASIC's interventions and the information sheet, market participants can better navigate the complex landscape of sustainable finance.

ASIC's recent report on greenwashing interventions showcases the regulatory body's commitment to safeguarding the interests of retail investors and financial consumers. Through its proactive approach, ASIC aims to promote fair and transparent markets by addressing misleading claims regarding ESG credentials. The outcomes of the interventions, including corrective disclosures and infringement notices, highlight the tangible impact of ASIC's actions. By sharing this information and providing guidance to market participants, ASIC contributes to the prevention of greenwashing practices and the growth of sustainable finance in Australia.

The release of this report coincides with Deputy Chair Karen Chester's keynote speech at the RI Australia 2023 annual conference, where she discussed ASIC's initiatives against greenwashing. As ASIC continues its ongoing surveillance and investigations, it is anticipated that further regulatory action will be taken to ensure the integrity of the sustainable finance landscape in Australia.

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