ASIC’s recent
greenwashinginterventions
Report 763 | May 2023

About this report
This report outlines ASIC regulatory interventions made between 1 July 2022
and 31 March 2023 in relation to greenwashing concerns.

Contents
Executive summary

3

Net zero statements and targets

5

Use of terms such as ‘carbon neutral’, ‘clean’ or ‘green’

6

Fund labels

7

Scope and application of investment exclusions and screens8

Key terms and related information

10

About ASIC regulatory documents
In administering legislation ASIC issues the following types of regulatory documents:
consultation papers, regulatory guides, information sheets and reports.
Disclaimer
This report does not constitute legal advice. We encourage you to seek your own
professional advice to find out how the Corporations Act and other applicablelaws apply to you, as it is your responsibility to determine your obligations.
Examples in this report are purely for illustration; they are not exhaustive and are notintended to impose or imply particular rules or requirements.

© ASIC May 2023 | REP 763 ASIC’s recent greenwashing interventions

2Executive summary
Listed companies, managed funds and superannuation funds are
increasingly making claims about their environmental, social andgovernance (ESG) credentials.
In response to this, and in line with our strategic priorities, we have
expanded our surveillance and enforcement activities related togreenwashing. Our aim is to ensure compliance with the law,promote fair markets, and support transparent disclosure so that retailinvestors and financial consumers can make informed decisions.

Greenwashing interventions
Where our recent surveillance work has identified concerns, including
potential misleading marketing and/or greenwashing by entities, we haveintervened to prevent harm to investors, consumers and market integrity,and to deter greenwashing misconduct.
Between 1 July 2022 and 31 March 2023, we achieved the following results:

23 total corrective disclosure outcomes
11 infringement notices issued
1 civil penalty proceeding commenced

The purpose of this report is to provide transparency to the market
on the nature of the matters where we have recently intervened. We
encourage issuers and advisers to consider this report when
preparing disclosures.

Our surveillance activities
Since publishing Information Sheet 271 How to avoid greenwashing whenoffering or promoting sustainability-related products (INFO 271), we haveundertaken both reactive and proactive surveillance in relation togreenwashing. Our work has covered disclosure documents, ProductDisclosure Statements (PDSs), advertisements, websites and other market
disclosures. More specifically, our work has included:›a surveillance of the managed funds sector, including a review of thePDSs of 122 funds, and further consideration of the investment
processes of 17 funds›

a surveillance of ESG-related disclosures in disclosure documents
lodged with us by companies raising capital from retail investors, and›

responding to reports of misconduct and breach reports.

© ASIC May 2023 | REP 763 ASIC’s recent greenwashing interventions

In the managed funds sector, 14 responsible entities amended theirdisclosure in 21 PDSs and one fund’s name was changed. In relation tolisted companies, 9 entities amended disclosure documents, company
websites or market announcements.
In this report we have provided examples of our regulatory interventions
with reference to the following themes:›net zero statements and targets›

use of terms such as ‘carbon neutral’, ‘clean’ or ‘green’›

fund labels, and›scope and application of investment exclusions and screens.

3

Looking ahead
Since its publication in June last year, INFO 271 has assisted product issuers
to improve their disclosures and manage their risk of greenwashing. We willcontinue to encourage all product issuers and advisers to consider thequestions and principles set out in INFO 271 and to keep up to date withboth international and domestic developments in relation to sustainablefinance.
We will continue to work towards achieving ASIC’s strategic priorities overthe course of 2023, focusing on identifying and preventing harm arisingfrom misleading marketing and greenwashing.
We will be progressing our surveillance on the superannuation fund sector
and the wholesale green bond market, and will continue our surveillanceof the managed fund and corporate sectors.
We are continuing to investigate a number of entities in relation tosuspected greenwashing and anticipate further enforcement action.

© ASIC May 2023 | REP 763 ASIC’s recent greenwashing interventions

Where our surveillance work
has identified concerns …
we have intervened toprevent harm to investors,consumers and market
integrity, and to deter
greenwashing misconduct.

4

Net zero statements and targets
We identified net zero statements and targets, and claims of decarbonisation, that did not appear to have a reasonable basis, or were factuallyincorrect. These representations were identified across a range of disclosures, including prospectuses, websites and market announcements. Ourinterventions resulted in corrective disclosures (see examples below). We also issued three infringement notices to a listed company.

Examples of corrective disclosure outcomes›››An oil and gas company removed net zero emissions statements,
including a target to achieve net zero emissions by 2050, from its
prospectus. The company was unable to provide additional
information about how the targets would be achieved and thepotential feasibility of achieving them.
A mining company provided clarification to the market, through amarket announcement, about previous statements it had madeabout its commitment to maintain a zero carbon emissions
footprint. The clarification included further detail about the remit ofthis statement, the steps that had been taken to date, expected
timeframes and further detail about its offsetting strategy.
A mining company removed ESG-related information on its website
to ensure consistency with disclosure in its prospectus. Thecompany’s website included information about the benefits andemissions reductions associated with using a particular technology
for mining, but the prospectus indicated that the company was
only at the exploration phase. For this reason, the company
decided to remove the content from its website rather thaninclude it in the prospectus.

© ASIC May 2023 | REP 763 ASIC’s recent greenwashing interventions

Infringement notices for net zero statements
We issued three infringement notices to listed energy company Black
Mountain Energy Limited (BME) for statements contained in three ASX
announcements.
The statements claimed that:›BME was creating a natural gas development project (‘ProjectValhalla’) with ‘net-zero carbon emissions’›

the greenhouse gas emissions associated with Project Valhalla
would be net zero.

We were concerned that BME either did not have a reasonable basis
to make the representations, or that the representations were factuallyincorrect.
BME paid the infringement notices on 3 January 2023.
For more information, see Media Release (23-001MR) ASIC issues
infringement notices to energy company for greenwashing (5 January2023).
Note: Payment of an infringement notice is not an admission of guilt or liability.

5Use of terms such as ‘carbon neutral’, ‘clean’ or ‘green’
We identified instances where entities described their operations, projects or products as ‘carbon neutral’, ‘clean’ or ‘green’ when there appeared to
be no reasonable basis for these claims. These claims were identified in prospectuses, product disclosure statements and market announcements.
After we raised concerns, companies made corrective disclosures (see examples below). We also issued four infringement notices to a listed company.

Examples of corrective disclosure outcomes›

A mining company qualified its ‘clean green’ claims in its prospectus.
The company had not completed studies that assessed thefeasibility of adopting renewable energy sources or other carbon
abatement strategies that would be required to achieve a lowercarbon footprint. The disclosure was amended to make clear that
this was a future-focused aspiration only.

›An energy exploration company removed ‘clean energy’ claims
from its prospectus. The company’s exploration activities were notsufficiently progressed to determine the viability of extracting‘clean’ energy from its assets.

›A mining company provided, in a supplementary prospectus, moredetailed information and context to the environmental andsustainability credentials of its ‘low-carbon’ processing technology.

›A mining company removed terms such as ‘high grade’, ‘lowcarbon’ and ‘responsibly sourced’ from its prospectus cover,website, investor presentations and other company disclosures. Thecompany did not appear to have a reasonable basis for making
these claims, given the early stage of its project.

© ASIC May 2023 | REP 763 ASIC’s recent greenwashing interventions›A company that manufactures and distributes Australian-madeproducts removed or clarified statements in its prospectus thatrelated to the sustainability-related characteristics of its products
and the company’s sustainability practices as there did not appear
to be reasonable grounds to make these statements.

›The responsible entity of a managed fund amended its PDS after
ASIC raised concerns about the entity’s use of vague andinsufficiently explained terms when describing its investment
approach. Terms included ‘social diversity’, ‘robust sustainable
practices’ and ‘protection of the planet’.

›The responsible entity of a managed fund removed vague claims
from its PDS that its minerals were responsibly sourced. The entity
also provided further explanation in its PDS about how its ore isrefined in accordance with relevant standards.

6

Infringement notices for statements about carbon neutrality and‘clean’ energy
We issued four infringement notices to listed energy company Tlou
Energy Limited (Tlou) for statements and images contained in two
ASX announcements. The representations conveyed that:›electricity produced by Tlou would be ‘carbon neutral’›Tlou had environmental approval and the capability togenerate certain quantities of electricity from solar power›Tlou’s gas-to-power project would be ‘low emissions’, and›Tlou was equally concerned with producing ‘clean energy’through the use of renewable sources as it was with developing
its gas-to-power project.

We were concerned that Tlou either did not have a reasonable basis
to make the representations, or that the representations werefactually incorrect. Tlou paid the infringement notices on 25 October
2022.
For more information, see Media Release (22-294MR) ASIC acts
against greenwashing by energy company (27 October 2022).
Note: Payment of an infringement notice is not an admission of guilt or liability.

© ASIC May 2023 | REP 763 ASIC’s recent greenwashing interventions

Fund labels
We identified instances where financial products or managed funds
were not ‘true to label’ – that is, the names of the products or funds
included sustainability-related terms that were inconsistent with thefunds’ investments or the investment process described. In response
to our concerns, one entity changed its fund name and anotherprovided clarification in its PDS.

Examples of corrective disclosure outcomes›

The responsible entity of a managed fund deleted, from a fundname, references that suggested that the fund sought totransition away from carbon. The entity deleted the references
after we raised concerns that the fund name was not consistent
with some of its investments.

›The responsible entity of a managed fund provided moredetailed disclosure in its PDS on how the fund’s investment
process aligned with its name, which included references to its
ethical practices. It had not previously provided a proper
explanation for its name in its PDS.

7

Scope and application of investment exclusions and screens
Investment screens are used to either include or exclude investments, such as shares, on the basis of certain characteristics or features.
We identified instances where we considered the scope or application of an investment screen or exclusion to be vague or overstated in a PDS oron associated websites for ESG-related financial products. We also observed instances where the investment screens were more limited in scopethan the representations suggested, or applied in a way inconsistent with the description used. We also identified circumstances where statedinvestment exclusions were not complied with.

Examples of corrective disclosure outcomes››The responsible entity of a managed fund amended a PDS toclarify the investment selection process. This amendment enabledinvestors to clearly understand which potential investments would
be excluded from the fund due to generating revenue over a
specified percentage from excluded activities (i.e. over theallowable materiality thresholds). The entity also provided more
information on how claimed ‘reputational risk of controversial
factors’ were taken into account in its investment process.
The responsible entity of a managed fund amended its PDS toexplain how it incorporated ESG considerations into its investment
research process in circumstances where such considerations
would have ‘a material financial impact’. This included explaining
the ESG considerations that they took into account and how theyassessed these considerations when determining whether toinclude, retain or exclude investments. The responsible entity also
replaced vague terms such as ‘influence change’ and ‘poor
sustainability characteristics’ on its website with more detailed
explanations.

© ASIC May 2023 | REP 763 ASIC’s recent greenwashing interventions

Infringement notices for statements made about investment
screening for a managed fund
We issued three infringement notices to investment manager
Vanguard Investments Australia Ltd (Vanguard) regarding
representations made in PDSs for the Vanguard International Shares
Select Exclusions Index Fund.
We were concerned that the statements had the potential to mislead
the public by overstating an investment screen that claimed toprevent investment in companies involved in the production,
manufacturing or significant sales of tobacco. Vanguard, however, did
not exclude companies involved in the sale of tobacco products.
Vanguard paid the infringement notices on 1 December 2022.
For more information, see Media Release (22-336MR) ASIC issues
infringement notices against investment manager for greenwashing(2 December 2022).
Note: Payment of an infringement notice is not an admission of guilt or liability.

8

Infringement notice for statements made about investment
screening for a superannuation product

Civil penalty proceedings for misleading statements about
investment exclusions

We issued an infringement notice to superannuation trustee Diversa
Trustees Limited (Diversa) for statements made on the website for oneof its superannuation products, Cruelty Free Super.

In February 2023, we commenced civil penalty proceedings against
Mercer Superannuation (Australia) Limited (Mercer) for allegedly
making misleading statements about the sustainable nature andcharacteristics of some of its superannuation investment options.

We were concerned that the statements may have been false ormisleading. The representations overstated investment screens thatclaimed to prevent investment in companies that were engaging in:›‘polluting and carbon intensive activities’›‘financing or support of activities which cause environmental orsocial harm’, and›‘poor corporate governance’.

While some investment screens were applied, they were more specificand implemented on a more limited basis than the website suggested.
Diversa paid the infringement notice on 22 December 2022.

We are alleging that Mercer made statements on its website that its‘Sustainable Plus’ investment options excluded investments incompanies involved in carbon-intensive fossil fuels like thermal coal, as
well as those involved in alcohol production and gambling. However,the Sustainable Plus options had investments in many companies thatwere involved in these industries.
Mercer’s website statements had marketed the Sustainable Plus
investment options as suitable for members who ‘are deeplycommitted to sustainability’.
For more information, see Media Release (23-043MR) ASIC launches
first court proceedings alleging greenwashing (28 February 2023).

For more information, see Media Release (22-379MR) ASIC issues
infringement notice against superannuation trustee for greenwashing(23 December 2022).
Note: Payment of an infringement notice is not an admission of guilt or liability.

© ASIC May 2023 | REP 763 ASIC’s recent greenwashing interventions

9Key terms and related information
Key terms
ASX

Related information
ASX Limited or the exchange market operated by ASX
Limited

ESG

Environmental, social and governancedisclosure document

For an offer of securities, this includes a prospectus, atransaction-specific prospectus, a short-form
prospectus, a two-part simple corporate bonds
prospectus, a profile statement and an offer
information statement per Chapter 6D of theCorporations Act 2001

infringement notice

An infringement notice issued under s12GX of theAustralian Securities and Investments Commission
Act 2001

investment screenInvestment screens are used to either include orexclude investments, such as shares, on the basis ofcertain characteristics or features. Positive screensseek investments that satisfy certain criteria, while
negative screens exclude investments that don’t meetcertain criteria.

PDS

A Product Disclosure Statement – a document that mustbe given to a retail client for the offer or issue of afinancial product in accordance with Div 2 of Pt 7.9 of
the Corporations Act 2001

Headnotes
ESG, civil penalty proceedings, corrective disclosure,greenwashing, infringement notices, interventions, listedentities, sustainability

ASIC documents
22-294MR ASIC acts against greenwashing by energy company
22-336MR ASIC issues infringement notices against investment
manager for greenwashing
22-379MR ASIC issues infringement notice against superannuation
trustee for greenwashing
23-001MR ASIC issues infringement notices to energy company
for greenwashing23-043MR ASIC launches first court proceedings alleging
greenwashing
ASIC Corporate Plan 2022–26: Focus 2022–23
ASIC Enforcement Priorities
INFO 271 How to avoid greenwashing when offering orpromoting sustainability-related products

Note: See s761A for the exact definition.

sustainable finance

Refers to the process of incorporating ESG factors into
financial decision-making© ASIC May 2023 | REP 763 ASIC’s recent greenwashing interventions

10