The Legal Light Justin Stack Greenwashing cleansed with big fines Business watchdog authorities are cracking down on so-called greenwashing, securing multi-million dollar fines against companies for stretching the truth on environmental claims in their advertising. Many businesses have been found to be making misleading claims, such as offering products that are "carbon neutral" to entice consumers who assume that by paying a few dollars more, they are helping to save the planet from global warming. Geoff Baldwin, business lawyer at Stacks Law Firm, warns businesses should get legal advice on whether their virtuous green claims can stand up to legal scrutiny. "The court has imposed one of the heaviest penalties for so-called greenwashing against the superannuation giant Mercer, with a massive $11.3 million penalty, after finding it made misleading statements about some of its 'ethical' superannuation investment options," Mr Baldwin said. "Greenwashing is the practice of making pro- ducts appear more environmentally friendly or ethically virtuous than they really are. Businesses hope the advertising makes them appear nice and caring while raking in a bit of extra cash." The Australian Securities and Investments Com- mission took Mercer Superannuation to court for breaching section 12DF(1) of the ASIC Act 2001, for engaging in conduct liable to mislead the public in its "Sustainable Plus" option. Mercer told investors this option would not invest in alcohol, gambling or carbon-intensive fossil fuels. But ASIC said it did, many times over. The Federal Court agreed and brought down the huge fine. Mercer also had to pay ASIC's costs. Handing down his decision, Justice Horan said it was vital consumers in the financial services industry can have confidence in the environmen- tal, social and governance (ESG) claims made by providers of financial products and services. "As is the case in many other industries, consu- mers may place great importance on ESG considerations when making investment deci- sions. Any misrepresentations... whether as an aspect of 'greenwashing' practices or otherwise, undermines that confidence to the detriment of consumers and the industry generally," said the judge. Mr Baldwin said it was ASIC's first greenwashing case. The landmark judgment was a warning to other businesses against misleading customers who are attracted by feel-good promises that are not true. "Companies would be advised not to make carbon-neutral claims, unless they can produce a credible science-based emissions reduction target that would stand up to scrutiny. "Businesses should get legal advice about whe- ther their green claims could breach corporate or consumer law. ASIC and the ACCC are cracking down on greenwashing." Clorox was ordered to pay $8.5 million for the misleading claim its plastic "Glad to be Green" bags were made from "50 per cent ocean recycled plastic". STACKS LAW FIRM Grant Avery Compensation Specialist No Win, No Fee Conditions apply 02 6592 6592 taree.stacklaw.com.au Partners in life The Legal Light Justin Stack Greenwashing cleansed with big fines Business watchdog authorities are cracking down on so - called greenwashing , securing multi - million dollar fines against companies for stretching the truth on environmental claims in their advertising . Many businesses have been found to be making misleading claims , such as offering products that are " carbon neutral " to entice consumers who assume that by paying a few dollars more , they are helping to save the planet from global warming . Geoff Baldwin , business lawyer at Stacks Law Firm , warns businesses should get legal advice on whether their virtuous green claims can stand up to legal scrutiny . " The court has imposed one of the heaviest penalties for so - called greenwashing against the superannuation giant Mercer , with a massive $ 11.3 million penalty , after finding it made misleading statements about some of its ' ethical ' superannuation investment options , " Mr Baldwin said . " Greenwashing is the practice of making pro- ducts appear more environmentally friendly or ethically virtuous than they really are . Businesses hope the advertising makes them appear nice and caring while raking in a bit of extra cash . " The Australian Securities and Investments Com- mission took Mercer Superannuation to court for breaching section 12DF ( 1 ) of the ASIC Act 2001 , for engaging in conduct liable to mislead the public in its " Sustainable Plus " option . Mercer told investors this option would not invest in alcohol , gambling or carbon - intensive fossil fuels . But ASIC said it did , many times over . The Federal Court agreed and brought down the huge fine . Mercer also had to pay ASIC's costs . Handing down his decision , Justice Horan said it was vital consumers in the financial services industry can have confidence in the environmen- tal , social and governance ( ESG ) claims made by providers of financial products and services . " As is the case in many other industries , consu- mers may place great importance on ESG considerations when making investment deci- sions . Any misrepresentations ... whether as an aspect of ' greenwashing ' practices or otherwise , undermines that confidence to the detriment of consumers and the industry generally , " said the judge . Mr Baldwin said it was ASIC's first greenwashing case . The landmark judgment was a warning to other businesses against misleading customers who are attracted by feel - good promises that are not true . " Companies would be advised not to make carbon - neutral claims , unless they can produce a credible science - based emissions reduction target that would stand up to scrutiny . " Businesses should get legal advice about whe- ther their green claims could breach corporate or consumer law . ASIC and the ACCC are cracking down on greenwashing . " Clorox was ordered to pay $ 8.5 million for the misleading claim its plastic " Glad to be Green " bags were made from " 50 per cent ocean recycled plastic " . STACKS LAW FIRM Grant Avery Compensation Specialist No Win , No Fee Conditions apply 02 6592 6592 taree.stacklaw.com.au Partners in life