An Australian super fund has been hit with a $10.5 million penalty for greenwashing.
The Federal Court found Active Super, formerly known as Local Government Superannuation Scheme, misled members and potential members by saying it had eradicated investments in gambling, coal mining and oil tar sands.
The fund also claimed to have eliminated Russian investments following the country's invasion of Ukraine.
Justice David O'Callaghan found that between February 2021 and June 2023, Active Super actually held investments in these types of assets, including coal miners Whitehaven Coal and Coronado Global Resources.
He rejected Active Super's argument that consumers would differentiate between direct investments and those held in pooled funds.
The case represents a win for the corporate regulator, the Australian Securities and Investments Commission (ASIC), which has been cracking down on companies making false or misleading statements about their green or ethical credentials, a practice known as greenwashing.
A total penalty of $10.5 million will need to be paid within 30 days of receiving the notice and Active Super will need to pay ASIC's legal costs, Justice O'Callaghan ordered on Tuesday.
Members will also need to be made aware of the matter.
Justice O'Callaghan said the super fund benefited by misrepresenting its ethical credentials, making it more attractive to investors and enhancing its reputation.
"As a result, investors lost the opportunity to invest in accordance with their investment values," he said.
False or misleading statements were made on the company's website, emails to members, media interviews and throughout various public reports and documents.
