Consumers are becoming more interested and insistent on investments which have elements of sustainability. Entities must be aware of their obligations when offering financial products or making sustainability statements in relation to their investments, specifically not to make false statements or mislead their consumers.
“Greenwashing” is the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical – and offering sustainable finance as a key priority. Entities must have a reasonable basis to make such representations and ensure the information they are providing is factually accurate.
ASIC have taken their first action for ‘greenwashing’ against listed energy company Tlou Energy Limited (Tlou). ASIC’s investigations stemmed from ASX announcements by Tlou claiming that:
- electricity produced by Tlou would be carbon neutral;
- Tlou had environmental approval and the capability to generate certain quantities of electricity from solar power;
- Tlou’s gas-to-power project would be ‘low emissions’; and
- Tlou was equally concerned with producing ‘clean energy’ through the use of renewable sources as it was with developing its gas-to-power project.
ASIC were concerned that Tlou either did not have a reasonable basis to make the representations, or that the representations were factually incorrect. As a result, ASIC have issued four infringement notices against Tlou 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 totalling $53,280.00.
Although payment of an infringement notice is not an admission of guilt or liability, Tlou paid the infringement notices on 25 October 2022.
For more information ASIC have published Information Sheet (INFO 271) ‘How to avoid greenwashing when offering or promoting sustainability-related products. Click here to view information sheet.