And the record greenwashing penalty goes to…

• 23 corrective disclosure outcomes;
• the issuance of 11 infringement notices; and
• commenced civil penalty proceedings against Mercer Superannuation (Australia) Limited ("Mercer").

ASIC's expanded surveillance and enforcement activities identified, in their view, concerns that warranted intervention to "prevent harm to investors, consumers and market integrity, and to deter greenwashing misconduct".

This momentum continued through to 2024 and 2025, with the enforcement priority remaining unchanged. In ASIC's interventions on greenwashing misconduct: 2023-2024 report, ASIC confirmed that it would continue to address greenwashing misconduct through surveillance and, where appropriate, enforcement activities. It seems ASIC has made-good on this statement as, during the period from 1 July 2022 to 30 June 2024, ASIC:

• commenced three civil penalty proceedings
• issued 19 infringement notices for a total of $270,360.00
• achieved 60 corrective disclosure outcomes.

When "Sustainable Plus" wasn't so sustainable

The first of ASIC's greenwashing cases was brought against Mercer in respect of investment options offered in the Mercer Super Trust (a registered superannuation entity of which Mercer is the trustee).

ASIC alleged - and Mercer accepted - the "Sustainable Plus" investment options provided exposure to 49 companies that were involved in activities that were directly inconsistent with Mercer's representations. Those representations stated that the options were not, and would not be, invested in companies involved in, or deriving profit from, alcohol production, gambling, or the extraction or sale of carbon-intensive fuels. In this case, the Court ordered Mercer to pay $11.3 million in penalties for the statements it found to be misleading.

ESG screens that did not screen

Shortly thereafter, ASIC commenced proceedings against LGSS Pty Ltd as trustee for the Active Super fund (previously known as Local Government Super). The Court held that LGSS made false and misleading representations to members, and potential members, that certain securities were eliminated or restricted by its ESG investment screens. For example, LGSS represented that investments in Russian companies and certain industries (e.g. gambling, coal mining and oil tar sands, etc.) had been eliminated or restricted. However, the evidence in the case showed that these investments had not, in fact, been excluded.

Consequently, the Court imposed penalties totalling $10.5 million against LGSS, emphasising that the false and misleading sustainability representations helped LGSS attract investors seeking ESG-aligned products and bolstered the fund's reputation as a responsible investment provider. In doing so, investors who relied on those claims lost the opportunity to invest in accordance with their investment values.

Looking ahead

Interestingly, ASIC's publicly stated enforcement priorities for 2026 did not specifically mention greenwashing as a specific enforcement area. However, this does not mean that ASIC will not be continuing its surveillance across the financial services industry to monitor for instances where financial product providers are making ESG claims and testing those claims to see if they are substantiated.

One of the benefits of having these recent decisions concerning allegations of greenwashing - and specifically the Court's consideration of what constitutes greenwashing and the penalties for that conduct - trustees, fund managers and product issuers now have legal precedents to consider when benchmarking any ESG claims being made regarding the financial products they deal in and with. Our view is that this is likely to lead to a lower level of enforcement activity from ASIC. Not because the issue is being treated as less important, but because product providers are likely removing any ESG-related claims from their product offerings to avoid the scrutiny and process of substantiating those claims if ASIC decides to test them.

Practical tips to reduce your greenwashing risk

TIP 1: Say less, but say it accurately - clarity is essential. Avoid vague terminology or broad descriptions that imply either a wider or stricter sustainability position than what is actually applied. Avoid broad or absolute statements unless they can truly be substantiated.

TIP 2: Independently verify ESG claims against actual investment practice - greenwashing risk often arises when people rely on assumptions rather than verification. Product providers who make ESG claims should put in place competent, independent review processes to confirm that such ESG claims can be independently verified, as well as sufficient controls to continue to ensure that those claims are being upheld.

TIP 3: Policies and procedures - make sure you have in place both accessible, written policies and clearly defined procedures for what steps must be taken if a concern is raised that an ESG claim made in relation to a financial product is not able to be met or is no longer being met (e.g. escalation and review; or removal of the claim and publication of a notification to clients).

If you offer a financial product which makes an ESG claim, we recommend that you conduct an independent review of those claims to ensure you can substantiate them. Our team has experience in, and can assist with, reviewing and/or amending your product disclosure documents and providing you with legal advice on this issue. Please contact our office if you would like to discuss how we can assist you.

If you have any questions, feel free to contact our team.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.