ASIC Reaffirms Red Light for Greenwashing

This week the Deputy Chair of ASIC, the Australian financial regulator, again reaffirmed its enforcement focus on greenwashing (click here), this time via an article published in a local trade journal. Salient points form the article include:

• Enforcement actions in response to greenwashing misconduct range from warning letters, infringement notices and civil penalty proceedings in the Federal Court,
• ASIC selects enforcement matters that are likely to have a broad reach, so that they have a deterrent effect beyond the issue that they are prosecuting in order to “send a compliance message to the sector”;
• Future enforcement focus will target:

1. Net zero statements and targets;
2. Use of terms such as ‘carbon neutral’, ‘clean’ or ‘green’;
3. The scope and application of investment exclusions and screens.

• ASIC is unlikely to have concerns where public statements are made that assert aspirational environmental positions with a sound basis and which are supported by business plans and investments to substantiate these goals;
• Where the above statements become problematic is when they are made in marketing campaigns designed to encourage investment or promote products to consumers, with a lack of substance to back up those assertions or substantiate how the transition will be achieved;
• ASIC aims to assist the market with published guidance (click here) on how to avoid greenwashing together with a summary of the issues they identified in their surveillance work in this area;
• New laws are on the horizon in the form of mandatory climate reporting which will require significant additional and new compliance obligations;
• Greenwashing will continue to be a priority for ASIC – this will be a central part of their 2024 enforcement priorities due to be announced soon at the ASIC Annual Forum in Melbourne.

 RegTrail Insights

ASIC’s comment about the “deterrent effect” of their enforcement actions should be noted. It is well established that regulators actively seek to make examples of high-profile “prizes” – large energy and commodity trading firms are not exempt from this group and should maintain the utmost vigilance about green claims being made external to the organisation.