ASIC Pursues Vanguard Australia in ‘Greenwashing’ Lawsuit

<p>The Australian Securities and Investments Commission
(<a href="https://www.financemagnates.com/terms/a/asic/">ASIC</a>) has sued the Australian arm of the US investment giant Vanguard for
allegedly misrepresenting the <a href="https://www.financemagnates.com/terms/c/compliance/">compliance</a> of some of its investments with the
environmental, social, and corporate governance (ESG) standards.</p><p>In a statement, the ASIC stated today (Tuesday) that Vanguard Investments Australia misled investors by claiming that all the securities under its Vanguard Ethically Conscious Global Aggregate Bond Index Fund had been assessed against certain ESG standards.</p><p>Misrepresenting
'Eco-Friendly' Investments</p><p>According to the
regulator, the investments held in the fund were based on the Bloomberg
Barclays MSCI Global Aggregate SRI Exclusions Float-Adjusted Index, and both
the fund and the index included companies that allegedly violated the ESG
standards.</p><p>Specifically, <a target="_blank" href="https://www.financemagnates.com/tag/asic/" rel="follow">the ASIC</a> claims that the securities included in the fund and in the index exposed investors to investments in companies in the oil and gas exploration sector. Additionally, the 'greenwashing' accusations stated that the Melbourne-based firm did not conduct adequate screening to exclude non-compliant securities issuers.</p><p>The ASIC Deputy Chair
Sarah Court said: "Investors are increasingly seeking
investments options that exclude certain industries, and they need to be
able to rely on the screening of investments to help them make these choices.
We consider that the screening and research undertaken on behalf of Vanguard
was far more limited than what was promised to the investors."</p><p>ASIC Issues Infringement
Notices</p><p>In December last year,
Vanguard paid approximately AUD $40,000 million in an infringement notice following
allegations by the ASIC that the company failed to exclude securities issued by
companies involved in the sale of tobacco products.</p><p>In the case filed today (Tuesday), the ASIC disclosed that it had issued AUD $140,000 infringement notices in response to the concerns about the alleged violations. Besides that, the regulator is seeking court penalties against the investment firm and an order that the company discloses any violations found by the court.</p><p>The ASIC defines
greenwashing as the practice of misrepresenting the extent to which the
financial products and services offered by a company are <a href="https://www.financemagnates.com/forex/education-centre/the-rise-of-social-impact-investing-blending-finance-and-purpose/" target="_blank" rel="follow">environmentally
friendly, sustainable, and ethical</a>.
Thus, the Australian watchdog requires that the companies claiming that their
investments are <a href="https://www.financemagnates.com/fintech/investing/fintech-and-sustainability-esg-investing-green-finance-and-carbon-neutrality/" target="_blank" rel="follow">ESG-compliant</a> must fully disclose the nature of such investments to the investors.</p>

This article was written by Jared Kirui at www.financemagnates.com.