Vanguard Investments fined for Greenwashing as Australia looks at ESG claims

Australia’s Federal Court has fined Vanguard Investments Australia Ltd. A$12.9 million ($8.9 million) for making misleading claims about a fund, the country’s largest sanction yet for greenwashing .

In March, the court found that the investment giant made numerous false or misleading claims about the environmental, social and governance factors of its nearly $1 billion Ethically Conscious Global Bond Index Fund. In addition to the fine, Vanguard was ordered to post a notice of the breach on its website for 12 months.

“Vanguard apologizes to its customers for these errors, which were unintentional,” a Melbourne-based spokesman said in an emailed statement, adding that the firm had reviewed relevant internal processes and strengthened procedures, governance, technology and training.

The case was brought by the Australian Securities and Investments Commission as the watchdog steps up its focus on the environmental claims of companies and money managers. ASIC said in August it had made almost 50 regulatory interventions to tackle greenwashing in the 15 months to June.

The fine for Vanguard comes on top of the penalty imposed on Mercer Superannuation Australia Ltd. in August, which was ordered to pay $11.3 million after ASIC sued the firm for misleading investors about some long-term products.

Australia will introduce mandatory climate disclosures from January and is also developing ESG labeling standards for products marketed as sustainable.

Photo: The Capital wind farm, operated by Infigen Energy, in Bungendore, New South Wales, Australia, on Sunday, July 21, 2024. Photo credit: Hilary Wardhaugh/Bloomberg

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