$14b super fund misled investors by greenwashing, court finds


“Active Super has co-operated with ASIC’s investigation and welcomes increased scrutiny on ESG [environment, social and governance] disclosure standards as being good for members, the super industry and the community,” she said.

In a minor victory for the fund with about $14 billion in assets, Justice O’Callaghan ruled Active Super was not exposed to tobacco companies through its investments in packaging companies, such as Amcor, that sold specialty cartons to the tobacco industry.

Gazprom was held by Active Super after Russia’s invasion of Ukraine, the corporate regulator claims.

Gazprom was held by Active Super after Russia’s invasion of Ukraine, the corporate regulator claims.Credit: Bloomberg

ASIC had alleged Active Super misled investors because it clearly and unequivocally stated it screened investments to “eliminate” exposure to the tobacco industry.

However, O’Callaghan said an ordinary reasonable consumer would not regard an investment in a packaging company that derived between 1.5 per cent and 11 per cent of its revenue from a tobacco business as a tobacco-related company.

He ruled in favour of ASIC’s allegations against Active Super’s investments in gambling, oil tar sands and coal companies, as well as Russian businesses after President Vladimir Putin invaded Ukraine in February 2022.

Active Super made claims in several product disclosure statements it would “eliminate investments that pose too great a risk to the environment and the community, for example nuclear weapons, tobacco manufacturing, oil tar sands and gambling”.

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It also said it would not actively invest in companies that derive 33.3 per cent or more of their revenue from coal mining but remained exposed to three coal stocks, and told investors it had “added Russia to its list of restricted countries it will not invest” but had funds in eight Russian companies.

The latest Federal Court judgment is a major win for the corporate regulator, which has vowed to crack down on greenwashing that it described as “the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical”.

It comes after the corporate regulator’s victories in December when the court ruled Mercer misled members about the sustainability of its investments, and again in March when the court found Vanguard misled investors about its $1 billion ethical fund.

The matter will return to court for a decision on costs and penalties.

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