In July 2023, ASIC took one of its most high-profile enforcement actions against greenwashing to date – launching civil penalty proceedings against Vanguard Investments Australia. The charge: alleged misleading claims about the ESG credentials of one of its bond funds, which included investments in companies with ties to fossil fuels and other excluded industries.
The case followed earlier actions against Mercer Superannuation and EnergyAustralia, and sent a clear message: environmental claims aren’t exempt from scrutiny.
For ASIC, it’s a matter of market integrity.
As ASIC Chair Joe Longo put it in a keynote speech in May 2024: “Sustainability-related claims – like any other information provided to investors – must be founded on reasonable grounds. They must be accurate. And, in particular, they must be able to be substantiated. Investors rely on this information, so that the decisions they make have a solid footing.”
ASIC’s crackdown is part of a broader global trend. Regulators worldwide, from the UK’s Financial Conduct Authority to the US SEC, are upping the pressure on firms making sustainability claims. But in Australia, ASIC has positioned itself as a leading enforcer in this space, putting regulated entities – and other regulators – on alert.
What is greenwashing – and why the sudden heat?
Greenwashing refers to the practice of making false or misleading claims about the environmental benefits of a product, service or investment. In the past, it was mostly a branding issue: a vague concern for marketing ethics or public image. Today, it’s a regulatory liability.
A surge in investor demand for ethical and sustainable products, coupled with rising pressure from civil society and regulators, has elevated greenwashing from a reputational risk to a compliance minefield.
The financial sector is particularly exposed. Investment products, superannuation offerings, and managed funds often use ESG language to differentiate themselves – and attract capital. But without clear, substantiated criteria, many such claims are now under scrutiny.
ASIC has made clear that “net zero aligned”, “low carbon”, and “green” are not just buzzwords – they’re potentially actionable statements if they mislead investors or omit material facts.
Inside ASIC’s enforcement posture
Since mid-2022, ASIC has steadily expanded its approach to greenwashing enforcement through a mix of guidance, surveillance, and legal action. The foundation of this strategy was laid with the release of INFO 271 in June 2022 – a regulatory guide that outlines expectations for labelling and disclosure in sustainability-related financial products. This guidance has become the benchmark for assessing whether ESG claims are clear, accurate, and substantiated.
Alongside issuing guidance, ASIC has ramped up surveillance efforts, closely monitoring climate and sustainability-related claims made by financial institutions, superannuation funds, and energy companies. This proactive oversight has been instrumental in identifying potentially misleading conduct before it becomes systemic.
Legal action has formed the third prong of ASIC’s strategy. Over the past year, the regulator has pursued a series of public enforcement outcomes – including infringement notices, civil penalty proceedings, and public warnings – aimed at setting precedents and deterring misleading behaviour.
Three high-profile cases illustrate this shift in enforcement. In February 2023, ASIC commenced proceedings against Mercer Superannuation, alleging that the fund made misleading statements about its ESG exclusions while investing in companies involved in fossil fuels and alcohol production. This marked ASIC’s first greenwashing case to reach the courts.
Then, in October 2023, EnergyAustralia was ordered to pay $1.5 million in penalties after promoting its products as “carbon neutral” without adequately explaining the role of purchased offsets. The regulator found that key contextual information had been omitted, potentially misleading consumers.
Finally, in July 2023, ASIC brought civil penalty proceedings against Vanguard Investments Australia. The company was accused of misrepresenting the ESG screening process for one of its bond funds, which included investments in entities linked to fossil fuels, tobacco, and other excluded industries – in direct contradiction to its stated investment criteria.
These cases reflect ASIC’s intent to hold both financial and consumer-facing entities accountable for the environmental claims they make. In total, the regulator issued over $140,000 in infringement notices and initiated three major civil actions for greenwashing in 2023 alone, signalling that this is no longer a niche compliance issue but a frontline regulatory concern.
Implications for regulators – and the regulated
ASIC’s greenwashing push isn’t just about penalising wrongdoing. It’s about raising the bar for market integrity – and sending a message to industry and fellow regulators alike.
For compliance teams, the implications are significant. Claims about ESG performance, carbon neutrality, or climate-conscious operations must now pass a higher standard of evidence. Firms are expected to:
- Substantiate sustainability claims with verifiable data
- Avoid vague or aspirational language unless clearly framed
- Regularly review marketing, disclosure and investment screening practices
The Australian Competition and Consumer Commission (ACCC) has also joined the fight. In March 2024, it released its updated Environmental and Sustainability Claims guidance, targeting misleading conduct under consumer law. The coordinated posture of ASIC and ACCC suggests a new era of enforcement harmony.
Walking the line: The regulator’s balancing act
Enforcing against greenwashing isn’t straightforward. It requires regulators to walk a tightrope between protecting consumers and investors and encouraging genuine sustainability efforts.
Some fear that overzealous enforcement could lead companies to shy away from sustainability claims altogether, stifling innovation. Others argue that ASIC has thus far targeted only the most egregious and clear-cut cases, ones where there is little ambiguity about the facts.
Terms like “net zero aligned” or “climate aware” may have aspirational value, but if used without clear definitions or qualifications, they can mislead.
ASIC has said it is not trying to discourage environmental leadership, only to ensure that claims made are “true, accurate and reliable.”
What comes next?
ASIC has reaffirmed that its crackdown on greenwashing and misleading ESG claims remains a top enforcement priority in 2025. This commitment is underscored by the regulator’s continued focus on sustainability-related misconduct across various sectors.
Chair Joe Longo has noted that enforcement will be complemented by further guidance, especially as international standards – such as the ISSB’s climate-related disclosure frameworks – gain traction in Australia.
Expect more litigation, more cross-agency collaboration, and potentially stronger penalties.
Regulated entities should also anticipate greater scrutiny from investors, watchdog groups and the media – and be prepared to defend their sustainability credentials with transparency and rigour.
For regulators, the message is equally clear: greenwashing enforcement isn’t a fad. It’s a test of regulatory maturity in a climate-conscious era.
