Recent activity by both the ACCC and ASIC has shown that greenwashing remains a significant regulatory and enforcement priority for both watchdogs. Now more than ever, it’s important to make sure that your business is making accurate, transparent and reliable environmental claims about its products and services.

Read our articles on ASIC’s focus on greenwashing in the financial services sector and the ACCC’s focus on greenwashing for further information.

ASIC launches Court action against Mercer

On 27 February 2023, ASIC commenced its first civil penalty proceeding in the Federal Court for greenwashing, regarding alleged conduct by Mercer Superannuation (Australia) Limited (Mercer). ASIC’s claim specifically relates to a category of superannuation investment options offered by Mercer, referred to as the ‘Sustainable Plus’ investment options (SPIOs). Mercer offered a number of products under the SPIO banner ranging from ‘conservative growth’ to ‘high growth’ options. The SPIOs were marketed towards ‘potential members that are deeply committed to sustainability’.

The alleged misleading representations were made for seven SPIO options offered by Mercer Super Trust (of which Mercer is a trustee). The representations included three statements on Mercer’s website and a statement made in a video. ASIC alleges that, by those Statements, Mercer represented that the funds invested in the SPIO products would not be invested in companies involved in, or deriving profit from the production or sale of alcohol, gambling, or the extraction or sale of carbon-intensive fossil fuels. Specifically, the video statement included the representation that the SPIO products:

‘…exclude investments in certain sectors deemed not to be sustainable. These options will not invest in alcohol, gambling and carbon intensive fossil fuels like thermal coal.’^[1]

ASIC alleges that despite Mercer’s representations that the SPIOs were sustainable products, the funds were invested in a range of companies that didn’t meet the products’ stated ESG criteria. As a result, SPIO members held investments in companies involved in the excluded industries, including 15 companies involved in the extraction or sale of fossil fuels, 15 companies involved in the production or sale of alcohol and 19 companies involved in gambling.

ASIC is seeking declarations that Mercer contravened the prohibitions on false or misleading statements and conduct under the Australian Securities and Investments Commissions Act 2001 (Cth), pecuniary penalties, adverse publicity orders and an injunction restraining Mercer from continuing to engage in the allegedly misleading conduct.

Since announcing greenwashing was an enforcement priority, ASIC has issued more than $140,000.00 in infringement notices in response to concerns about alleged greenwashing.By issuing proceedings against Mercer, ASIC has shown its commitment to taking allegations of greenwashing seriously and will litigate where necessary. In an interview with the Australian Financial Review, commissioner of ASIC Danielle Press, stated the case against Mercer was ‘one of several investigations that we have [under way] in greenwashing and superannuation’. Danielle Press further stated that these investigations were expected to result in court action, or infringement notices.Accordingly, we expect to see continued action by ASIC in the financial services sector for greenwashing, particularly in the superannuation space.

ACCC greenwashing sweep identifies widespread concerning claims

The competition regulator recently announced the results of its greenwashing sweep across the internet to identify misleading environmental and sustainability marketing claims, conducted in October and November 2022. The sweep reviewed 247 company websites across target sectors, including energy, vehicles, household products and appliances, food and drink packaging, cosmetics, clothing and footwear.

The ACCC identified that 57% of businesses scrutinised during the sweep were identified as having made concerning claims about their environmental credentials. The target sectors identified as having the highest proportion of concerning claims were the cosmetic, clothing and footwear, and food and drink sectors.

The Commission reported that it is concerned that a significant proportion of businesses are making claims which are vague or unclear. Broad claims that a product is ‘environmentally friendly’, ‘green’ or ‘sustainable’ were of concern to the ACCC and were flagged as requiring further scrutiny to ensure that these claims are backed up by supporting evidence.

Greenwashing will clearly be a key priority for the ACCC this year. Businesses should ensure any marketing claims of environmental or sustainability credentials of their goods and services are backed up by evidence, including reliable scientific reports, transparent product or supply chain information, reputable third-party certification or other forms of evidence.

If you are concerned that your business has made any false or misleading marketing claims about the environmental or sustainability credentials of its product or service, seek legal advice. The ACCC has confirmed that businesses who come forward and raise their concerns transparently will be treated more favourably than businesses who wait for the ACCC to unearth instances where false or misleading claims have been made about a product.