In this Funds Update for 4 October 2024:
Court orders $12.9 million penalty for greenwashing
On 25 September 2024, the Federal Court ordered the responsible entity of a registered scheme (RE) to pay a $12.9 million penalty for making false or misleading representations about the ESG exclusionary screens applied to an index fund.
The RE had admitted to misrepresenting the “ethical” characteristics of its fund labelled “ethically conscious”. It was found that approximately 74% of the securities in the fund by market value were not researched or screened against applicable ESG criteria.
It was also found that the RE had benefited from its misleading conduct, by enhancing its ability to attract investors, and reputation as a provider who offered investment funds with ESG characteristics.
The claims were made in a range of public communications, including:
- 12 product disclosure statements;
- a media release;
- statements published on the fund manager’s website;
- an interview on YouTube; and
- a presentation at an event which was published online.
The full decision is available here, and the ASIC media release concerning the decision is available here.
For more detail on this case, please read our earlier Funds Update here.
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