Active Super's $10.5M Greenwashing Fine Shocks Industry

Australian Pension Fund Hit with $10.5 Million Greenwashing Penalty
Australian super fund Active Super has been directed to pay a $10.5 million fine by the Federal Court after being convicted of misleading investors regarding its environmental, social, and governance (ESG) and sustainable investment policy. The fine was imposed after the fund gave misleading assurances that it wasn't investing in gambling, coal mining, and Russian companies following the invasion of Ukraine. But between February 2021 and June 2023, Active Super had continued to invest in the likes of SkyCity Entertainment Group (gambling), Gazprom PJSC (Russia), Shell, and Whitehaven Coal, outrageous disregards for its so-called policies.

The Federal Court, in June 2024, ruled that Active Super's action constituted a misrepresentation and the fund had not been implemented as its investors would reasonably believe, by standards and principles. The deceptive representations enabled the fund to obtain investment from investors willing to invest ethically, but were in fact misled by the fund investing in companies in opposition to its publicly professed ESG objectives.

The Australian Securities and Investments Commission, or ASIC, has been hard at work dodging greenwashing and enforcing the rule to advance the interests of investors. The case is the third of this type of court decision against greenwashing in Australia, with ASIC going further with its action to monitor and penalize firms that are misleading investors with false details about their sustainable practices.

In spite of the ruling, Active Super had been apparently running against the court's order. In a bold step following the scandal, the fund merged with Vision Super, a step that could be part of its plan to undo the effect of the court case. Active Super managed $14.7 billion for 86,547 members as of December 2024, a far cry from its recent $29 billion under management for 165,000 members.

The case is a reminder to those who make unsubstantiated assertions of sustainability and to the company's accountability and transparency in the rapidly expanding ESG investing universe. With greenwashing becoming a more pressing issue, regulators such as ASIC will continue to raise the bar in terms of calling out companies for their ESG commitments and shielding investors against misleading communications.