Corporate Watchdog Plans to Target Shady Green Funds

A wind turbine is seen in a file photograph. Spencer Platt/Getty Images

The Australian Securities and Investment Commission (ASIC) will hone in on “misleading conduct” in sustainable finance including greenwashing next year.

This is one of multiple enforcement priorities for the corporate watchdog in the 2024 year, outlined on Nov. 21.

The independent Australian government raised concerns about consumers paying green premiums, along with greenwashing, at the ASIC Annual Forum in Melbourne.

Chair Joe Longo, speaking at the forum, said sustainable financial reporting and disclosure has been identified by ASIC as an area of serious potential harm to consumers.

Mr. Longo said consumers may end up paying a green premium for investing in funds that don’t meet ESG standards.

“This, coupled with consumers’ inability to make informed decisions due to poor governance and disclosure, may erode confidence in the financial system as a whole. Not only is this going in the opposite direction from our destination, it also ends up undermining the sector’s objectives,” he said.

‘Greenwashing’ Threat is a Concern

Further, the ASIC chair raised concerns about the threat of greenwashing.

Greenwashing is when a misleading statement is made about the environmental benefit of a product, potentially conning a consumer.

Mr. Long said greenwashing remains a serious threat to the integrity of the Australian financial system and investor confidence.

“Put simply, it erodes trust, which is essential for the operation of fair and efficient markets. It’s also imperative that we maintain market integrity to attract the capital required to make the transition to net zero and ensure that climate risk is adequately priced into the market,” he said.

“Greenwashing directly undermines credible efforts to reduce emissions and address the climate crisis.”

Misleading conduct related to sustainable finance and greenwashing was also a priority of ASIC during 2023.

Multiple Priorities for ASIC Including Superannuation

In 2024, ASIC will also look to focus on a wide range of other priorities. These include high cost credit and predatory lending practices, the superannuation sector, including member services and erosion of balances, insurance claims, technology and operational resilience, and compliance with financial hardship obligations.

New priorities in 2024 compared to the previous year include the superannuation industry, insurance claims, financial hardship, and the reportable situation regime.

Enforcement action is also planned to target “gatekeepers facilitating misconduct” and “poor distribution of financial products.”

Solar panels can be seen on a suburban roof in Albany, Western Australia, on Aug. 11, 2023. Susan Mortimer/The Epoch Times

Commenting on this strategy, ASIC deputy chair Sarah Court said, “We are taking matters to court and pursuing higher penalties than ever before.”

“In delivering against our priorities this year, we took action against some of Australia’s biggest corporations. And we are not deterred from taking challenging cases where legal outcomes are not guaranteed.”