ASIC has commenced civil proceedings in the Federal Court against Vanguard Investments Australia for alleged greenwashing.
Vanguard’s ‘Ethically Conscious Global Aggregate Bond Index Fund’ has allegedly been found to have issued close to 30 bonds directly exposing investors to investments linked with the fossil fuel industry, including those undertaking activities connected with oil and gas exploration, despite the Fund advertising that was screened against appropriate ESG criteria.
Moreover, further investments held by the Fund were based on a Bloomberg index which ASIC alleged has not conducted appropriate ESG research over a significant proportion of their bond issuers leading to approximately 180 issued bonds to fall in breach of ESG criteria.
ASIC Deputy Chair Sarah Court commented: “We know that investors are increasingly seeking investment options that exclude certain industries, and investors need to be able to rely on investment screens to help them make these choices.
“In this case, Vanguard promised its investors… that the product would be screened to exclude bond issuers with significant business activities in certain industries, including fossil fuels.”
She further explains: “[ASIC] 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.’
As at 26 February 2021, the total FUM of the Vanguard Ethically Conscious Global Aggregate Bond Index Fund was over $1billion.
It’s crucial for companies to uphold their environmental claims and ensure transparency.