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After undertaking 35 interventions against greenwashing in the past year, the commission has declared sustainability reporting based on ISSB standards as the antidote.
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Only meaningful disclosure will stop greenwashing, says ASIC
11 July 2023
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ASIC has declared only responsible and transparent disclosure will be able to combat greenwashing practices, which it says are eroding the confidence of investors in the market for sustainability-related financial products and corporate strategies.
ASIC deputy chair Karen Chester said despite the 35 regulatory interventions the commission had taken against greenwashing activity in the past nine months to March 2023, a more concrete answer to stopping it was necessary.
“While these interventions are proportionate remedies, a more enduring antidote to greenwashing lies in comparable high-quality disclosure to meet investor information needs,” said Ms Chester.
“Global standards to this end will soon be within our reach. Sustainable finance (and by default combating greenwashing) is today a whole of ASIC regulatory priority.”
“We have been delivering on this priority through proactive surveillance and enforcement of governance and disclosure standards.”
Ms Chester said the eventual antidote to combat greenwashing would be a disclosure framework that met international standards, but currently, it meant disclosures that complied with the present law.
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“Ultimately, it means a mandatory climate change-related disclosure regime in Australia that is based on the global baseline being developed by the International Sustainability Standards Board (ISSB),” she said.
“ASIC supports the government’s climate reporting and broader sustainable finance strategy (including anti-greenwashing initiatives and disclosure supportive policies like ESG labelling) through our role on the Council of Financial Regulators Climate Working Group.”
Ms Chester said businesses should focus on ensuring they have undertaken the correct processes and practices surrounding sustainability reporting not only under the current requirements but also future ones under the ISSB.
Examples of greenwashing which led to ASIC’s intervention included where:
- Net zero statements and targets did not appear to have a reasonable basis or were factually incorrect.
- The use of terms like carbon neutral, clean, or green did not have a reasonable basis for the related claims.
- The use of inaccurate labelling or vague terminology in sustainability-related funds.
- Overstating the scope or application of a sustainability-related investment in a PDS or on associated websites for ESG-related financial products.
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