Login
Powered by
MOMENTUM
MEDIA
Powered by MOMENTUM MEDIA
The Federal Court has penalised Australian superannuation fund Active Super $10.5 million for misleading conduct about the supposedly ethical nature of its investments.
Earlier today (Tuesday, 18 March), the Federal Court of Australia imposed a penalty of more than $10 million on Active Super, formerly known as the Local Government Superannuation Scheme (LGSS), following a finding last year that the fund had contravened the law when it invested in various securities that it had claimed were eliminated or restricted by its environmental, social and governance (ESG) investment screens.
The Australian Securities and Investments Commission (ASIC) first launched civil penalty proceedings against Active Super in August 2023, following alleged greenwashing in its Impact Report, as well as on its website, email correspondence, a 2021 Product Disclosure Statement, a Sustainable and Responsible Investment Policy, and in a media interview.
The fund had claimed that it had eliminated investments that posed too great a risk to the environment and the community, including gambling, coal mining and oil tar sands; however, it held direct and indirect investments in companies such as gambling entity SkyCity Entertainment Group, Russian entity Gazprom PJSC, oil company Shell, and mining company Whitehaven Coal.
In late 2023, Lawyers Weekly explored the legal implications of greenwashing amid the rise of sustainability practices.
In a statement, ASIC deputy chair Sarah Court said: “This is a significant penalty that sends a strong message to companies making sustainable investment claims that those claims need to reflect the true position.
“This case demonstrates ASIC’s commitment to taking on misleading marketing and greenwashing claims made by companies promoting financial services. It is our third greenwashing court outcome, and we will continue to keep greenwashing in our sights.”
Prior to its merger with Vision Super in March of this year, as at 30 June 2024, Active Super managed approximately $14.7 billion in superannuation assets for 86,547 members.
Justice David O’Callaghan of the Federal Court said: “It was not disputed that LGSS’s contraventions were serious.
“LGSS benefited from its misleading conduct by misrepresenting the ‘ethical’ nature of a significant part of its investments, which on any view enhanced its ability to attract investors to the Active Super fund and enhanced its reputation as a provider of investment funds with ESG characteristics. As a result, investors lost the opportunity to invest in accordance with their investment values.
“Further, the contravening conduct continued over an extensive period of time (approximately two and a half years); the likely causes of it were never explained; it concerned substantial investments; it was likely to have led to investors losing confidence in ESG programs; and the failure by LGSS to have in place properly functioning systems and processes designed to ensure that its representations were not false or misleading was the responsibility of senior management.
“Further, when confronted with the allegations by ASIC, LGSS ran a host of contrived arguments in its defence at trial.”
Jerome Doraisamy is the managing editor of Lawyers Weekly and HR Leader. He is also the author of The Wellness Doctrines book series, an admitted solicitor in New South Wales, and a board director of the Minds Count Foundation.
You can email Jerome at:
Get breaking news
Jerome Doraisamy
