Australia Hits Active Super with $10.5 Million Fine for Greenwashing

Australia’s Federal Court has ordered superannuation fund Active Super to pay an AUD 10.5 million ($6.70 million) penalty for misleading investors in its environmental, social, and governance (ESG) commitments. The verdict follows court discoveries that revealed Active Super continued investing in businesses it had publicly claimed to exclude from its portfolio.

The Court Admonished Active Super’s Shady Practices

The Australian Securities and Investments Commission (ASIC) took LGSS Pty Ltd, which operates Active Super, after discovering discrepancies between the fund’s ESG promotional stance and its actual investment practices. Active Super marketed itself as an ethical, sustainable investor, ostensibly eliminating investments in gambling, coal mining, oil tar sands, and Russian businesses.

However, contrary to the fund’s claims, it remained directly and indirectly involved in controversial companies like gambling operator SkyCity Entertainment, Russian energy giant Gazprom, oil tar sands developer Shell, and coal mining company Whitehaven Coal. This information was not openly available, likely in a bid to preserve the fund’s public-facing image.

LGSS benefitted from its misleading conduct by misrepresenting the “ethical” nature of its investments. As a result, investors lost the opportunity to invest according to their values.

Justice O’Callaghan

Justice O’Callaghan admonished Active Super’s conduct, noting that its misleading representations bolstered its ability to attract investors while violating the trust of those seeking ESG-aligned investments. He added that the reported misconduct persisted for two years as senior management failed to enforce proper compliance mechanisms.

The Case Could Draw Increased Scrutiny to SkyCity

ASIC has intensified its actions against false ESG marketing, holding companies accountable for deceptive sustainability claims. This newest fine marks SIC’s third major greenwashing case, reinforcing the regulator’s commitment to transparency. ASIC deputy chair Sarah Court hoped the legal action against Active Super would send a clear message to similar companies.

This is a significant penalty that sends a strong message to companies making sustainable investment claims that those claims need to reflect the true position.

Sarah Court, ASIC deputy chair

The scandal may also draw renewed scrutiny to SkyCity Entertainment Group, a company benefiting from Active Super’s controversial investments. The operator has faced its own share of problems with Australian regulators. The company had to pay a record AU$67 million ($44.1 million) fine imposed in June 2024 for severe AML and CTF law breaches. SkyCity also faced backlash for its Auckland casino’s smoking policies.

Continued enforcement efforts by Australian regulators underline the regulatory pressure on financial institutions and gambling companies to ensure enhanced transparency and accountability. The case against Active Super, in particular, signals that companies can no longer use false sustainability claims as a marketing point without facing legal consequences.