The Federal Court has set a precedent for greenwashing in financial services, ordering Mercer Superannuation (Australia) Limited to pay a penalty of $11.3 million in the first greenwashing case brought before the Court by the Australian Securities and Investments Commission (ASIC).

Mercer Superannuation admitted to making misleading statements on its website about the sustainable nature of seven 'Sustainable Plus' investment options offered by the Mercer Super Trust. The misleading statements suggested that the Sustainable Plus options were suitable for members deeply committed to sustainability as they excluded investments in companies involved in carbon-intensive fossil fuels, alcohol production, and gambling. However, the Court found that members who took up the Sustainable Plus options had investments in industries the website statements said were excluded.

"'This was ASIC’s first greenwashing case brought before the Federal Court; a landmark case both for ASIC and for the financial services industry. It demonstrates the importance of making accurate ESG claims to investors and potential investors.’" said ASIC Deputy Chair Sarah Court. "‘Today’s matter is a strong example to the financial services industry of the greenwashing action we will take. We will continue to monitor the market for ESG-related claims that cannot be validated by evidence to ensure the market is fair and transparent,’"

Justice Horan, who presided over the case, said: "‘The contraventions admitted by Mercer are serious. They arose from failures by Mercer to implement adequate systems to ensure that ESG claims in relation to its superannuation products were accurate, and to monitor and enforce the application of any sustainability exclusions associated with such ESG claims.’" He emphasised the importance of consumer confidence in ESG claims, noting, "‘…it is vital that consumers in the financial services industry can have confidence in ESG claims made by providers of financial products and services. As is the case in many other industries, consumers may place great importance on ESG considerations when making investment decisions. Any misrepresentations in relation to ESG policies or practices associated with financial products or services, whether as an aspect of “greenwashing” practices or otherwise, undermines that confidence to the detriment of consumers and the industry generally.’"

ASIC has two further cases concerning greenwashing before the Federal Court, against Vanguard Investments Australia and Active Super. The regulator has issued over $270,000 in infringement notices in response to concerns about alleged greenwashing.