Shining a light on greenwashing

In May, the Australian Securities & Investments Commission (ASIC), the corporate, markets, financial services and consumer credit industry regulator, announced the outcomes of its current crackdown on greenwashing.

The report details the themes and results of the 35 interventions it has actioned across the first three quarters of this financial year, including 23 corrective disclosure outcomes, 11 infringement notices and the commencement of one civil penalty proceeding. According to another statement, ASIC has “issued over $150,000 in infringement notices regarding greenwashing since October 2022”.

ASIC has openly been conducting surveillance in both a proactive and reactive manner. According to the report, it has reviewed “disclosure documents, Product Disclosure Statements (PDSs), advertisements, websites and other market disclosures”, with the resulting intervention enabling it to “prevent harm to investors, consumers and market integrity, and to deter greenwashing misconduct”.

Areas of alleged greenwashing

The report summarises the interventions into four key themes, being:

Theme	Area of concern
Net zero statements and targets	Where statements or decarbonisation plans were either factually incorrect or did not appear to have a ‘reasonable basis’.
Use of sustainability-related terms	Use of phrases like ‘carbon neutral’, ‘clean’ or ‘green’ without a reasonable basis.
Labelling of funds	Labelling funds or products with sustainability-related terms inconsistent with the actual investments or process.
Clarity around investment exclusions and screens	Use of vague or overstated investment screens, or where the screens’ limited scope was not stated, inconsistently applied, or non-compliant.

ASIC has provided further details of these themes and examples of its corrective disclosure outcomes. Find out more.

Avoiding greenwashing

ASIC has communicated its expectations on ‘How to avoid greenwashing’, starting with releasing a detailed information sheet in June 2022. It continues to educate the market on the regulatory settings for communicating sustainability-related products or benefits. Stamping out greenwashing and other misleading conduct is high on its list of 2023 enforcement priorities, along with its focus on market integrity in its long-term corporate plan.

Organisations should heed the multiple warning from ASIC regarding communicating sustainability-related products, activities and disclosures. It’s critical that sustainability and climate-related activity be aligned with the corporate purpose and strategy – not just used as a marketing tool. When communicating, it’s crucial to consider:

Is the statement accurate and verifiable?
If making future goals, is there a plan on how to achieve them?
Could the communication be considered an exaggeration, ambiguous, overstatement or misleading?

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