Active Super Fined for Deceptive Ethical Investment Claims
Investment firm slapped with $10.5M fine for deceptive marketing strategies
In a stark warning to financial institutions, the Federal Court of Australia has slapped a whopping $10.5 million fine on Active Super. The superannuation fund, catering to over 86,000 members, finds itself in hot water for investing in gambling companies and restricted sectors while billing itself as an ethical investment option.
Active Super, which touted environmental and community safety in its investment strategy, had expressed clear intentions to exclude gambling operations. However, an extensive ASIC investigation exposed the fund's continued investments in gambling entities such as SkyCity Entertainment Group, PointsBet Holdings, and Tabcorp.
Sarah Court, the ASIC Deputy Chair, made it clear, saying, "This penalty underlines our firm stance against companies peddling sustainable investment claims that don't square with reality." Court further stressed, "This case serves as a robust rebuke of misleading marketing and greenwashing claims made by companies offering financial services."
Active Super also maintained investments in coal mining, oil tar sands, and Russian entities Gazprom PJSC and Rosneft Oil Company, despite its claims to the contrary. Despite merging with Vision Super on March 1, Active Super managed approximately $14.7 billion in assets.
Justice O'Callaghan remarked, "Active Super's contraventions were indeed serious. The fund benefited from its misleading conduct by misrepresenting the 'ethical' nature of a significant part of its investments, thus boosting its ability to attract investors." O'Callaghan added, "This misrepresentation meant investors missed out on investing in accordance with their ethical values."
The deceptive practices transpired over approximately two and a half years, with Active Super's misleading statements appearing across various platforms, including its website, product disclosure statements, and impact reports. When confronted by ASIC, the fund attempted various contrived defenses, according to O'Callaghan, marking the third successful greenwashing court action by ASIC.
ASIC's ongoing fight against greenwashing in financial services dates back to 2018, when the commission published a report on climate risk disclosure by Australia's listed companies. Since then, ASIC has published guidance on avoiding greenwashing in sustainability-related products and has made climate-related financial risks and addressing greenwashing key priorities for their supervisory and enforcement activities.
Currently, ASIC is consulting on a draft regulatory guide on the sustainability reporting regime and has listed addressing financial system climate change risks and governance failures as enforcement priorities for 2025. This global trend against greenwashing reflects increased scrutiny of ESG claims by regulatory bodies worldwide, making it essential for financial institutions to maintain transparency and truthfulness in their sustainability claims.
- In the realm of finance and business, the Federal Court of Australia has imposed a massive fine of $10.5 million on Active Super, a superannuation fund, for falsely advertising itself as an ethical investment option that avoids gambling companies.
- Active Super, whose membershipcounts over 86,000 individuals, contravened its commitments by investing in companies such as SkyCity Entertainment Group, PointsBet Holdings, and Tabcorp, despite its claims to the contrary.
- ASIC Deputy Chair, Sarah Court, criticized such deceptive practices, stating, "This penalty underscores our firm stance against companies peddling sustainable investment claims that don't align with reality."
- Consequently, investors were misled, believing they were investing according to their ethical values, a significant disappointment that highlights the need for transparency in personal finance and wealth management.
- The global trend against greenwashing, or misleading environmental, social, and governance (ESG) claims, continues to put regulatory bodies under increased scrutiny, making it imperative for financial institutions to maintain truthfulness and transparency in their sustainability promises.
