Active Super has been ordered to pay an AU$10.5 million penalty by the Federal Court after the Australian Securities and Investments Commission (ASIC) found the superannuation fund engaged in misleading conduct regarding its environmental, social, and governance (ESG) claims.
The ruling marks ASIC’s third court action against greenwashing—where companies make false or misleading sustainability claims—and underscores the regulator’s commitment to ensuring transparency in ESG disclosures.
ASIC initiated proceedings against Active Super, formally known as LGSS Pty Limited, in August 2023, alleging that between February 2021 and June 2023, the fund falsely claimed to have excluded investments in companies linked to tobacco, gambling, and Russian entities. Despite these assertions, Active Super retained holdings in several such companies.
In handing down the decision, Justice O’Callaghan found that Active Super’s representations were misleading and deceptive, in breach of Australian consumer law. The AU$10.5 million penalty serves as a warning to financial institutions that sustainability claims must be backed by verifiable actions.
This case follows similar greenwashing actions by ASIC against Vanguard Investments Australia and Mercer Superannuation, reinforcing the regulator’s focus on holding financial firms accountable for their sustainability claims.
ASIC Deputy Chair Sarah Court stated that the ruling demonstrates the seriousness of greenwashing and its impact on investor trust.
“Superannuation funds and financial institutions must ensure their investment practices align with their advertised commitments. ASIC will continue to take action where we identify misleading statements in the market,” Court said.
The judgment is expected to have broader implications for the Australian financial sector, as regulators globally increase scrutiny on ESG claims. The ruling sends a clear message that greenwashing will not be tolerated, and companies misrepresenting their sustainability credentials risk significant penalties.
ASIC has urged investors to scrutinise ESG claims carefully and report any concerns about misleading statements. The regulator’s crackdown aligns with a broader international push to strengthen ESG transparency and accountability.
With regulators worldwide tightening rules on greenwashing, financial institutions face growing pressure to ensure ESG commitments are not just marketing tactics but are reflected in genuine investment strategies.
The AU$10.5 million penalty against Active Super highlights the financial and reputational risks of failing to adhere to ESG promises, setting a precedent for future enforcement actions in the sector.
