ASIC warns others on sustainability claims as Tlou coughs up fine

The ASX-listed energy group’s claims about emissions linked to its projects triggered the fine from the financial regulator ASIC, which also warned others on ‘greenwashing’.

Tlou Energy, led by managing director and chief executive officer Tony Gilby, has copped the first penalty from ASIC on climate compliance. Picture: Peter Wallis

An ASX-listed gas, hydrogen and solar company has become the first to be penalised by the corporate regulator as part of their probe into so-called greenwashing.

Tlou Energy, which is developing projects in southern Africa, was issued with four infringement notices and a $53,280 fine after the Australian Securities and Investments Commission found it had made misleading statements about its climate credentials.

ASIC has repeatedly warned it would pursue companies it considered were inflating their environmental credentials, releasing specific guidelines in June.

Assets tied to ESG investing strategies are expected to rise to around $US50 trillion ($70 trillion) by 2025, according to estimates by Bloomberg.

Tlou, ASIC said, had falsely represented to investors in a presentation in October 2021 that “it was equally concerned with producing ‘clean energy’ through the use of solar and hydrogen as it was with developing its gas-to-power project”.

But Tlou’s primary asset was predominantly a fossil fuels project based on the exploitation of natural gas reserves, the infringement notice reads.

“Tlou’s plans to develop clean energy in the form of solar and hydrogen were at an early stage and were not planned to be significantly advanced until sometime after Tlou was earning revenue through the sale of electricity generated through the combustion of natural gas.”

Tlou also conveyed to investors that all electricity generated at its Lesedi power station in Botswana would be carbon neutral through the use of sequestration from around the outset of its operations.

“ (Tlou had) not undertaken any substantive modelling of the likely carbon dioxide emissions that would be generated by the Lesedi Project and would be required to be offset via sequestration for the electricity generated to be ‘carbon neutral via sequestration’,” the ASIC notice reads.

The company had also not done any work on “the feasibility of the Lesedi project producing carbon neutral electricity via sequestration” and had “not undertaken any meaningful investigation as to whether it would be possible to obtain carbon credits or offsets in relation to any sequestration activities undertaken at the Lesedi project.”

Sarah Court, ASIC’s deputy chair, said the regulator was “investigating a number of listed entities, super funds and managed funds in relation to their green credentials claims”.

“Companies are on notice that ASIC is actively monitoring the market for potential greenwashing and will take enforcement action, including court action, for serious breaches,” Ms Court said.

“As entities promote sustainability and green practices as part of their value proposition, they must ensure they can support those statements and have a reasonable basis for doing so.”

Tlou, which first alerted the market to ASIC’s investigation in September, said it had paid the penalty but did “not accept that it contravened any provision of the Corporations Act 2001 or the Australian Securities and Investments Commission Act 2001”.

“ASIC has advised Tlou that it will not be taking any further enforcement action following its investigation,” the company said in a statement.

Tlou shares last traded at 2.5c.

ASIC’s action comes as the government moves to spending $36m over the next four years on climate modelling and the development of climate reporting standards.