It intends to partner with regulatory bodies and agencies to share strategies and insights on preventing greenwashing
Combating greenwashing is crucial for maintaining trust in sustainable finance-related financial products and services, according to the Australian Securities & Investments Commission (ASIC).
In a keynote speech at the recent RIAA Conference, ASIC chair Joe Longo (pictured) emphasised the importance of accurate and substantiated environmental, social, and governance (ESG) claims in maintaining market integrity and investor trust, while highlighting the detrimental impact of misleading ESG ones, commonly referred to as greenwashing, on market trust and the misallocation of capital.
“ASIC’s role is to help shore up that trust, by finding the right balance between guidance, surveillance, and enforcement,” Longo said. “The scaffolding provided by ASIC’s regulatory guidance is one element of the overall picture. Our ongoing enforcement action is another.”
He added that as sustainability claims proliferate, ASIC’s oversight will adjust accordingly to ensure these claims are based on reasonable and verifiable grounds.
Longo also supported the adoption of internationally aligned, mandatory climate-related financial disclosure requirements in Australia. Such measures, he said, would bolster transparency and support the growth of sustainability-related products and services by providing a robust information architecture.
The ASIC chair also endorsed the Australian government’s draft sustainable finance strategy, which proposes the development of a national sustainable finance taxonomy and a labelling system for sustainable investment products. These initiatives, he said, are intended to complement the broader efforts to curtail greenwashing.
In addition to regulatory measures, ASIC plans to collaborate with partner agencies within the Council of Financial Regulators and engage with other entities like the Australian Competition and Consumer Commission (ACCC) and the clean energy regulator to share insights and strategies on preventing greenwashing.
“It’s simply not an option for industry to put off preparations, and then scramble to comply,” Longo said. “Reporting entities have to be doing the work now – marshalling the data, embedding the capabilities, and keeping the necessary records.
“A lack of transparency has never been acceptable. Nor has misleading consumers and investors. That’s why greenwashing is in our sights.”
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