Court finds Active Super engaged in ‘greenwashing’

The Federal Court has found Active Super broke the law by misleading customers in another win in ASIC’s campaign against greenwashing companies.

Active Super broke the law when it falsely pumped up its climate credentials, with the Federal Court finding it misled customers, including by claiming Russian investments were “out” following the invasion of Ukraine.

Between February 1, 2021 and June 30, 2023, Active Super invested, directly and indirectly, in securities it claimed to have eliminated or restricted according to its environmental, social and governance investment screens.

The company claimed in marketing materials it did not invest in gambling, coal mining and oil tar sands, and said “(we) added Russia to our list of excluded countries following the invasion of Ukraine”.

But, the Australian Securities & Investments Commission said Active Super actually held nine investments in Russia during the relevant period including in: Rosneft Oil Co, Etalon Group, Mail.ru, Transneft PJSC, Yandex NV, Sberbank of Russia and three investments in Gazprom PJSC through the Macquarie and Wellington Funds.

Additionally, Active Super invested in gambling companies SkyCity Entertainment Group Ltd and Pointsbet Holdings Ltd, oil tar sands companies ConocoPhillips and Shell Plc, along with Whitehaven Coal Limited and Coronado Global Resources.

ASIC deputy chair Sarah Court welcomed the judgement.

“This is a significant outcome which shows our commitment to taking on misleading marketing and greenwashing claims made by companies in the financial services industry,” she said.

“ASIC took this case because it sends a strong message to companies making sustainable investment claims that they need to reflect their true position.”

Federal Court judge David O’Callaghan rejected Active Super’s argument stating ordinary investors could draw a distinction between direct and indirect exposures through pooled funds.

“It seems to me that such a consumer would not draw that distinction, including in particular because there is nothing in the Impact Reports or on the (Active Super) website that suggests that the claims that there was … ‘no way’ Active Super would invest members’ funds in gambling, tobacco and so on, was to be read subject to a proviso that there was a way in which it would do exactly that, by investing indirectly, not directly,” he said.

“In my view, that distinction is one which no ordinary reasonable consumer would draw.”

Justice O’Callaghan said a consumer would not “search around for some investment policy that might qualify” there was “no way” Active Super would invest in tobacco or gambling.

“Absent some indicator on the face it, such as a footnote or asterisk with some accompanying statement that the apparently unqualified language was, in fact, something that was subject to qualifications or limitations, they would have no reason to,” he said.

The court found Active Super did not mislead customers about holdings in companies involved in packaging production for tobacco products and specific representations were not misleading about Russian or oil tar sands investments.

ASIC’s chief regulator Joe Longo has talked up the agency’s efforts to tackle greenwashing, and it has targeted financial giants including Mercer and Vanguard in the past over claims they made about their climate credentials.

Penalties and declaratory relief will be decided at later hearings.

Originally published as Court finds Active Super engaged in ‘greenwashing’