Reflection on ASIC v Vanguard – ASIC’s First Court Enforcement Decision on “Greenwashing”

May 2024
Region: Asia Pacific

In late March 2024, the Australian Securities and Investments Commission (ASIC) won its first “greenwashing” court enforcement action against Vanguard Investments Australia Limited (Vanguard). While “greenwashing” (the practice of a business conveying a false or misleading representation about the environmental impact of its operations) has been a major focus of ASIC and the Australian Competition and Consumer Commission (ACCC) since 2022, and will remain so into the foreseeable future, this is the first instance where ASIC has obtained a court judgment against a corporation for misleading environmental, social and governance (ESG) statements.

The court found that Vanguard had contravened the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by making misleading claims about the composition of Vanguard’s ESG-focused fund, known as the “Vanguard Ethically Conscious Global Aggregate Bond Index Fund” (Fund) (the Decision).

In our view, the Decision does not clarify or expand the law relating to misleading or deceptive statements under the ASIC Act or the equivalent statutory prohibitions in the Corporations Act 2001 (Cth) and Competition and Consumer Act 2001 (Cth). Rather, the judgment provides a practical example of how the preexisting case law applies to companies’ ESG-type representations.