ASIC takes first formal enforcement action for greenwashing by issuing $53k fine, hints at more to come

In the announcements that gave rise to the fines, TOU had included reports and presentations about its business operations. These materials included statements and images in which TOU claimed that:

• electricity produced by TOU would be carbon neutral;
• TOU had environmental approval and the capability to generate certain quantities of electricity from solar power;
• TOU's gas-to-power project would be ‘low emissions’; and
• TOU was as equally concerned with producing ‘clean energy’ through the use of renewable sources as it was with developing its gas-to-power project.

ASIC’s concern in relation to misleading conduct was that there was either no reasonable basis for TOU to make those representations, or that the representations were factually incorrect.

As a result, TOU was issued four infringement notices alleging it had made false or misleading representations in contravention of s 12DB(1)(a) of the Australian Securities and Investments Commission Act 2001 (Cth), and a penalty of $53,280.

The penalty, being the first of its kind, is confirmation that regulators in Australia, particularly ASIC, are taking greenwashing very seriously. This is consistent with ASIC’s 2022-2026 Corporate Plan, which details its focus on sustainable finance practices, and states that it will take action to prevent harm arising from greenwashing and to support effective climate and sustainability governance and disclosure.

We are also aware that ASIC is actively seeking out ‘green marketing’ and doing website trawls. They are then engaging with companies and investment firms and interrogating the marketing materials and disclosure documents and requiring companies to better explain how they take ESG factors into account in their investment strategies, to better define terms that they use in public materials and to set out clearly how ESG scorecards and measurements are calculated.

For a breakdown of ASIC’s guidance on how to avoid greenwashing and the questions companies should ask themselves in this regard, see our previous focus piece, ‘Greenwashing: ASIC’s guidance on how to avoid it’.