ASIC probes the ethics of super funds’ green claims

The Australian Securities and Investments Commission says various funds and some listed companies are under active review.

The green credentials of companies is being scrutinised.

The corporate regulator is investigating superannuation funds for allegedly overemphasising their environmental, sustainable and ethical practices.

Australian Securities and Investments Commission deputy chairman Sarah Court told a parliamentary committee on Tuesday that various funds – and some listed companies – were now under active review.

“We have a number of investigations into allegations by super funds and listed entities,” Ms Court told the hearing.

Her comments followed statements by the competition watchdog that it too was cracking down on greenwashing practices so people could trust that the decisions they were making to protect the environment were based on truthful information.

ASIC told the committee it was considering greenwashing across all its business streams because the ESG sector was growing rapidly.

ASIC deputy chair Sarah Court.

There is about $US25 trillion ($40 trillion) already invested globally in assets that use ESG strategies, which means they include sustainability data in their financial models.

ASIC said it has already been asked by Market Forces to investigate Santos for greenwashing. That follows a request by Environmental Defenders Office lawyer Kirsty Ruddock to investigate Glencore for similar practices.

The regulator told the hearing in Canberra that it was critical that companies were doing what they claimed.

ASIC deputy chair Karen Chester said: “When you look at the size of the decarbonisation task ahead of us, there needs to be integrity in the market.”

ASIC commissioner and deputy chair Karen Chester. Picture Gary Ramage

ASIC has previously said it was conducting a review to establish whether the practices of funds that offer these products align with their promotion of these products; in other words, whether the financial product or investment strategy is as “green” or ESG-focused as claimed.

ASIC officials separately said they was also looking into the buy now, pay later sector, having received a number of complaints from consumers.

“There is a consistent cohort of consumers facing financial hardship because of the BNPL sector,” said ASIC commissioner Sean Hughes.

“We are working closely with BNPL operators and welcome consumers bringing these matters to our attention.”

ASIC commissioner Sean Hughes.

BNPL – where customers can buy items without interest charges but suffer high fees if repayment schedules are not met – is not currently considered a licensed credit product or covered under the same regulations as credit-card providers.

The government is due to release an issues paper on the sector this month to increase regulation as more Australians struggling with the rising cost of living use this form of credit to pay for critical bills.

Banks and other lenders have been highly critical of various BNPL operators for not conducting credit checks on customers to assess their ability to repay.