ASIC gets third greenwashing conviction

Last week, the Federal Court found that LGSS, as Active Super’s trustee, broke the law with misleading claims concerning environmental, social and governance (ESG) credentials.

In its marketing Active Super (formerly known as Local Government Super) said it had eliminated investments that posed too great a risk to the environment and the community, including gambling, coal mining and oil tar sands. Following the invasion of Ukraine, Active Super also claimed that Russian investments were “out”.

However, the Federal Court found that from 1 February 2021 to 30 June 2023, Active Super invested in various securities it had claimed were excluded or restricted by ESG investment screens. These securities were held by Active Super both directly and indirectly, via managed funds or ETFs.

The judge rejected Active Super’s argument that an ordinary or reasonable consumer would draw a distinction between holding shares in a company and indirect exposures through a pooled fund.