ASIC to crackdown on 'greenwashing' and 'greenhushing'
Climate reporting requirements will impose new obligations on Australia’s biggest entities next year
The corporate watchdog is taking aim at “greenwashing” and “greenhushing” with companies and superannuation funds facing new obligations so consumers aren’t misled.
As consumers become more street smart about exaggerated climate credentials or greenwashing, some companies are opting to stay quiet – known as greenhushing – on environmental impact and carbon emissions so they can’t be accused of falling short.
“It’s the same old story of a lack of transparency and misleading public statements – with a ‘green twist’,” Australian Securities and Investments Commission (ASIC) chair Joe Longo will tell a conference in Sydney on Thursday.
“While the shift to sustainable finance may constitute a once-in-a-generation transformation, the fundamental underlying principles are as old as regulation itself: the principles of accuracy and transparency.”
Climate-related reporting requirements to take effect in January will start by imposing new obligations on Australia’s biggest entities.
But small businesses in their supply chains will be swept up in the changes as demands for information increase and face direct reporting obligations in coming years.
“When companies make misleading statements about ESG (environmental, social and governance) issues, it erodes trust in the market and can lead to the misallocation of capital,” Mr Longo will warn.
“And indeed, omitting material sustainability-related information – that is, ‘greenhushing’ – can also be misleading and deceptive, depending on the nature and significance of the omission.”
Nor is compliance bad for business as some would have you believe, according to Mr Longo.
“It’s simply not an option for industry to put off preparations and then scramble to comply,” he will say.
“Reporting entitles have to be doing the work now – marshalling the data, embedding the capabilities and keeping the necessary records,” he will tell the Responsible Investment Australasia Association conference.
ASIC has been active in enforcing the law in this area under existing laws. So far, 17 infringement notices have been issued, totalling more than $230,000.
The regulator won its first greenwashing civil penalty action, against Vanguard Investments, and has two other civil penalty proceedings underway in the Federal Court.
“Any entity which is clear, accurate and transparent in its disclosures has nothing to fear,” Mr Longo will say.
“To equate compliance with loss of profit is effectively to say that the best business is a dishonest one.”
CONDUCT ATTRACTING INTERVENTION:
* Net-zero statements and targets made without a reasonable basis or that were incorrect
* The use of terms such as “carbon neutral”, “clean” or “green”, not based on reasonable grounds
* The overstatement or inconsistent application of sustainability-related investment tools to screen investments
* The use of inaccurate labelling or vague terms in sustainability-related funds