ASIC keeps up the pace with its third greenwashing proceeding against Active Super

This proceeding is a reminder to financial product issuers that:

• representations made to members must accurately reflect the actual implementation of restrictions, exclusions and/or negative screening practices; and
• removal or amendments to claims made on websites, PDS disclosures, investment policies and/or ESG-related reports are not enough to rectify the damage, as far as ASIC is concerned.

What has ASIC running after Active Super?

In its newest Federal Court proceeding, ASIC alleges LGSS Pty Ltd (LGSS) as trustee of Active Super claimed to 'eliminate investments that posed too great a risk to the environment and community' but, in practice, exposed Active Super members to securities it claimed to restrict.

ASIC refers to representations on Active Super's website which purported to explain why their investments 'are making a difference' and outlined Active Super's responsible investment principles. It is claimed LGSS represented Active Super as an ethical superannuation fund which provides responsible and sustainable investments for its members.

The claim focuses on 28 investments Active Super had, within their investment options between February 2021 to June 2023, which were contrary to representations made about the type of restrictions it had implemented in relation to companies involved in gambling, tobacco, oil tar sands projects, coal mining and Russian investments.

Examples of these alleged misleading claims include:

• Gambling - "...we will not invest in organisations that derive more than 10% of their revenue from...gambling"
• Tobacco - "a. ...Active Super will not make investments in companies that derive any revenues in the following areas of activity...
  ii) Tobacco: Companies involved in the manufacture and/or production of tobacco products"
  "Over 20 years ago we were the first super fund in Australia to stop investing in tobacco."
• Oil tar sands projects - "We eliminate investments that pose too great a risk to the environment and the community, for example nuclear weapons, tobacco manufacturers, oil tar sands and gambling."
• Coal mining - "...the Fund will not make investments in companies that derive 33.3% (one-third) or more of their revenues in high carbon sensitive activities."
• Russian investments - "Russian Investments out"
  

  "Until recently, Active Super had a very small amount of exposure to Russian stocks..."

These exposures were a result of both direct investments in listed securities and indirect investments in ETF's as part of allocations Active Super made under their investment options.

In this case, ASIC seems to be surveying more platforms for alleged misleading statements than seen in ASIC's action against Vanguard. In bringing this claim, ASIC has considered statements made by Active Super contained within:

• PDS Fact Sheets;
• Sustainable and Responsibility Investment Policies;
• ESG related reports, such as annual 'Impact Reports';
• Active Super's website;
• social media platforms (Facebook, LinkedIn and Instagram); and
• public statements made by a senior executive and published in an Investment Magazine.

ASIC has warned other superfunds "must have evidence to back their claims" and "ensure they are not promising exclusions that they cannot guarantee."

The proceeding was commenced by ASIC notwithstanding that prior to, Active Super removed or amended 18 of the 20 representations included in its claim.