ASIC opens green claim
The Australian Securities and Investments Commission (ASIC) has taken aim at fund management giant Vanguard, accusing it of duping investors in its $1 billion-plus ethical bond product.
ASIC is accusing Vanguard of greenwashing - a deceptive practice that misleads investors about the true sustainability of assets.
In ASIC's second major greenwashing case this year, Vanguard stands accused of failing to live up to its promises.
The allegedly ‘Ethically Conscious Global Aggregate Bond Index Fund (Hedged)’ claimed to avoid investing in businesses associated with fossil fuels and other questionable industries. But, ASIC's investigation suggests a different story.
Vanguard's bond fund was reportedly found to have invested in activities tied to oil and gas exploration, including funding Chevron and Colonial Pipeline's controversial oil pipeline in the US, among others. This could be a breach of its own proclaimed ESG (Environmental, Social, and Governance) criteria.
“Vanguard promised its investors and potential investors that the product would be screened to exclude bond issuers with significant business activities in certain industries, including fossil fuels,” said ASIC's deputy chair, Sarah Court.
“We consider that the screening and research undertaken on behalf of Vanguard was far more limited than that being promised to investors, and we consider this constitutes another example of greenwashing.”
This is not the first time Vanguard has found itself in ASIC's crosshairs. The company has already been fined around $40,000 over a separate greenwashing incident. The latest case could prove to be the wake-up call the industry needs.
ASIC is seeking penalties and declarations of wrongdoing in the Federal Court, as well as an order for Vanguard to publicly admit its contraventions.
Vanguard has acknowledged its mistake and apologised to their clients. The company claims the breach was unintentional and that it has implemented measures to prevent such incidents in the future.