Corporate regulator urges court to fine Mercer $11.3m over greenwashing claims

A Federal Court judge is set to decide how much financial services giant Mercer should be fined over Australia’s first ever greenwashing court case.

ASIC deputy chair Sarah Court during the ASIC annual forum at the Sofitel in Melbourne. Aaron Francis

Australia’s top corporate cop has urged a Federal Court judge to fine financial giant Mercer $11.3m over claims they misled consumers by falsely pumping up their climate credentials, in the country’s first legal action against greenwashing conduct.

The Australian Securities and Investments Commission singled out greenwashing as a key ongoing enforcement priority and launched its civil case against Mercer Superannuation in February, alleging it made public statements about seven ‘sustainable plus’ investment options offered by the Mercer Super Trust.

The website statements marketed the options to members who are “deeply committed to sustainability” because they would not invest in carbon intensive fossil fuel companies.

But, the corporate regulator claimed those with ‘sustainable plus’ options had investments in companies including AGL Energy, BHP, Glencore and Whitehaven Coal.

On Thursday, ASIC barrister Tim Begbie KC told Federal Court judge Christopher Horan in Melbourne Mercer should be hit with a penalty that will sufficiently deter other companies — from all industries — from engaging in similar conduct without being “oppressive”.

“You are putting a price on contraventions which will be sufficient to deter Mercer from doing it in future but (also) others who might be minded to do it,” he said.

“From ASIC’s point of view, businesses that might be thinking about indulging in greenwashing … (it) is a risk not worth running. The ramifications of that are as obvious as they are significant.”

It is the corporate regulator’s case that Mercer contravened the relevant parts of the ASIC Act each time a user accessed the ‘sustainable plus’ options statement online, and viewed a video about the scheme.

Between November 2021 and February 2023, when different versions of the statements were marketed online along with the video, there were more than 10,300 unique page accesses of the statements. The video was viewed 471 times, the court heard.

As well, during the period when the statements and videos were available the number of members invested in one of the sustainable options increased from 1742 as of November 12, 2021 to 2477 by March 3 this year, the court heard.

While the content was available until February 27 when ASIC launched its case, Mercer has co-operated entirely with the regulator and has largely agreed on the proposed penalty. A trial was avoided, and the matter is an “agreed penalty case”.

As a result, Mr Begbie said Justice Horan will have to contend with “slight tensions” in his ultimate decision.

“Greenwashing (is) depriving consumers of choice (and) putting them in a situation where they invested in industries they were trying not to invest in,” he said.

“There is this fundamental question about consumers trusting what they are told about these matters and a real vice in greenwashing by one business is that it undermines that trust for all businesses.

“Businesses that actually are making the efforts and bearing the costs of structuring their financial services to accurately and faithfully reflect sustainability and governance concerns of consumers are undermined by having the perception out there that such claims can’t be trusted.”

Barrister for Mercer Philip Crutchfield KC addressed Justice Horan briefly and said: “We are in complete agreement with everything my friend put to your honour.”

Justice Horan said he was not likely to settle on the final penalty until early next year.

Originally published as Corporate regulator urges court to fine Mercer $11.3m over greenwashing claims