Superannuation giant Mercer fined $11.3m by Federal Court for greenwashing

Mercer has apologised for misleading clients about the sustainable nature of some of its investment options after it was ordered to pay a penalty in a landmark case.

Mercer has been found by the Federal Court to have made misleading greenwashing claims. picture: Zoe Phillips

Superannuation giant Mercer has apologised for misleading clients about the sustainable nature of some of its investment options after it was ordered to pay a $11.3m penalty in a landmark case.

The Australian Securities & Investments Commission launched proceedings against the super provider in the Federal Court last year, accusing Mercer of greenwashing practices between November 2021 and March 2023.

It is the first time that the corporate regulator has convinced the court to impose a penalty for greenwashing.

The court found Mercer made misleading statements on its website that seven ‘‘Sustainable Plus’’ investment options excluded investments in companies involved in the production or sale of alcohol, gambling and fossil fuels.

However, the Sustainable Plus options had investments in companies involved in industries the website statements said were excluded, such as miners BHP, Glencore and Whitehaven Coal, fossil-fuel energy provider AGL and alcohol producers Carlsberg, Heineken and Treasury Wine ­Estates. Investments were also made in 19 companies involved in gambling, including Aristocrat Leisure, Crown and Tabcorp.

ASIC deputy chair Sarah Court said that it was a landmark case both for the regulator and for the financial services industry, demonstrating the importance of making accurate ESG claims to existing and potential investors.

ASIC deputy chair Sarah Court said the verdict is a landmark moment for the country. Picture: Aaron Francis

“Today’s matter is a strong example to the financial services industry of the greenwashing action we will take. We will continue to monitor the market for ESG-related claims that cannot be validated by evidence to ensure the market is fair and ­transparent.”

In his decision, Justice Christopher Horan said the contraventions by Mercer were serious.

He ordered the group to pay a penalty of $11.3m and publish a notice on its website for six months detailing its admitted conduct.

“They arose from failures by Mercer to implement adequate systems to ensure that ESG claims in relation to its superannuation products were accurate, and to monitor and enforce the application of any sustainability exclusions associated with such ESG claims,” he said.

A Mercer spokesman told The Weekend Australian that the mistakes were not intentional and it would not use members’ funds to pay the penalty.

“We accept the court’s decision handed down today regarding five marketing statements that were overly broad. We acknowledge the need for accurate information concerning the sustainable nature and characteristics of superannuation invest­ment options,” Mercer said. “We have co-operated with ASIC and undertaken a comprehensive review of our internal marketing processes and procedures.”

ASIC has launched proceedings against a number of financial service providers in the past year over alleged greenwashing.

Vanguard is before the court and may be penalised after the Federal Court found it misled investors about its $1bn ethical bond fund. Active Super, which has more than $13.5bn in assets, is also awaiting its fate after being found guilty in June of making misleading ESG claims.