ASIC secures first greenwashing win in Vanguard judgment
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The news: The corporate regulator has secured its first greenwashing civil penalty case, securing a win in its lawsuit against Vanguard.
The context: Federal Court of Australia Judge Michael O'Bryan said Vanguard had breached the Corporations Act by engaging in conduct that was liable to mislead the public in how it had described screening processes linked to an environmental fund. Vanguard had admitted to misleading conduct.
While penalties are yet to be decided in the case, the Australian Securities and Investments Commission (ASIC), which brought the lawsuit, can pursue civil penalties against companies of up to 50,000 penalty units (currently $15.65 million), three times the benefit obtained and detriment avoided to the company through the unlawful conduct, or 10% a company's annual turnover — capped at $782.5 million.
A penalty hearing in the case has been scheduled for 1 August.
ASIC has listed enforcement action against "misleading conduct in relation to sustainable finance including greenwashing" as a priority for the year.
What they said: Following the decision, ASIC deputy chair Sarah Court said: "Vanguard promised its investors and potential investors that the product would be screened to exclude bond issuers with significant business activities in certain industries, including fossil fuels, when this was not always the case.
"As ASIC’s first greenwashing court outcome, the case shows our commitment to taking on misleading marketing and greenwashing claims made by companies in the financial services industry. It sends a strong message to companies making sustainable investment claims that they need to reflect the true position."
The sources: ASIC media release, Federal Court of Australia
