Recent Greenwashing Actions and Trends

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At our recent PDS Managers roundtable webinar, Emily Turnbull, Jillian Button and Julia Clemente from Allens provided a rundown of recent greenwashing actions and trends.

Greenwashing enforcement in Australia has moved firmly from warning to action. ASIC issued six infringement notices and commenced one civil penalty proceeding for greenwashing in 2025 alone. While greenwashing has come off ASIC's enforcement priority list, ASIC's 2025/26 Corporate Plan flags financial reporting, climate reporting and director conduct as priority areas, and greenwashing remains amongst the ACCC's 2026/27 enforcement priorities.

Importantly, ASIC's recent focus has not been limited to disclosure failures; it is increasingly scrutinising the governance and internal processes that sit behind public ESG representations, including whether entities are applying their stated policies in practice.

Key Cases

ACCR v Santos – Federal Court Judgment (2025)

The Federal Court dismissed all of ACCR's greenwashing claims against Santos, awarding costs against ACCR. ACCR had alleged that Santos misled investors through claims about "clean energy" from natural gas, a "credible and clear" net zero roadmap, and "zero emissions" blue hydrogen. The court found none of these representations were misleading when assessed in context by a reasonable member of the target audience, being sophisticated investors with an understanding of the energy transition.

Despite Santos winning, the judgment contains important guidance for anyone making sustainability representations:

  • Targets are representations about future matters. Statements about net zero goals or emissions reduction targets must be based on reasonable grounds at the time they are made, and the onus sits with the issuer. The court did find that long-range targets (here, 20 years out) can satisfy this test, provided disclosures properly acknowledge the assumptions and uncertainties involved.

  • Context is everything. Representations were assessed by reference to the document as a whole and the reasonable expectations of the target audience, not in isolation. A sophisticated investor audience understood that long-term climate pathways would need to adapt as markets and regulation evolve.

  • "Target audience" matters. The court defined the relevant audience narrowly as investors, excluding lenders and creditors who are primary users under AASB S2. How that audience is characterised will shape the assessment of any future misleading conduct claim.

ASIC v Fiducian Investment Management Services Limited

This is ASIC's most interesting greenwashing civil penalty proceeding to date because it links greenwashing directly to governance failures, not just misleading disclosure.

ASIC alleged that Fiducian, as responsible entity of its Fiducian Sustainability Fund, contravened s 12DF of the ASIC Act by making misleading representations in its PDS and separately breached its duty of care and diligence under s 601FC(1)(b) of the Corporations Act.

The alleged greenwashing:

  • Fiducian represented that the fund would invest only in companies "positive for society and the environment" and avoid certain sectors without reasonable grounds for those representations

  • Fiducian also represented that it regularly monitored the fund's compliance with its ESG statements, again, without reasonable grounds

The alleged governance failures (s 601FC(1)(b) of the Corporations Act):

  • Failing to monitor and review whether investments made by external investment managers aligned with the fund's ESG objectives

  • Failing to ensure the PDS was not false, misleading or deceptive

  • Failing to identify ESG risks and implement adequate controls

  • Failing to comply with its own risk management and compliance procedures

This case illustrates that for responsible entities, greenwashing is not just a marketing or disclosure problem, it is a board-level governance issue. An RE that outsources investment management cannot simply rely on the manager; it must have controls in place to verify alignment with fund objectives and ESG representations.

The Litigation Landscape

The presentation mapped the spectrum of legal frameworks through which greenwashing exposure can arise:

Already litigated:

  • Trustee duties (SIS Act, s 52) — McVeigh v REST

  • Risk management (CPS 220) — Rossiter v ANZ

  • Duties of responsible entities (Corps Act, s 601FC) — ASIC v Fiducian

  • Members' rights and remedies (Corps Act, s 247A) — Beere v NAB

  • Misleading or deceptive conduct (Corps Act ss 1041E, 1041H; ASIC Act ss 12DB, 12DF) — ASIC v LGSS, ASIC v Mercer, ASIC v Vanguard

Not yet litigated (but clearly on the horizon):

  • Financial reporting obligations (Corps Act, Chapter 2M)

  • Sustainability reporting obligations (Corps Act, Chapter 2M)

  • PDS ESG disclosure requirements (Corps Act, ss 1013D, 1013DA, 1013E)

  • Corporate trustee director duties (Corps Act, ss 180–181; SIS Act, s 52A)

  • Duty to seek information from investment managers (SIS Act, s 102)

ASIC Regulatory Guide 280 – PDSs (RG 280.138–280.151)

ASIC's RG 280 sets out its expectations for sustainability-related representations in Product Disclosure Statements. Paragraphs 138–151 are the most directly relevant for fund managers.

Core principle:

Any sustainability-related representation in a PDS must be accurate, balanced and able to be substantiated. ASIC is particularly concerned about representations that are technically true but create a misleading overall impression.

Key guidance:

  • Screening claims must be precise. If a PDS states that a fund excludes certain sectors or companies, ASIC expects that exclusion to apply to the fund's actual portfolio, including any underlying funds or externally managed sleeves. Broad claims like "we avoid harmful industries" without specifying scope, thresholds or methodology are at high risk of being misleading.

  • ESG labels and fund names carry weight. Where a fund's name or label implies a sustainability characteristic (e.g., "sustainable", "responsible", "ESG", "ethical"), ASIC expects the fund's investment strategy to substantively reflect that label. A fund cannot rely on minor ESG tilts to justify a prominent sustainability label.

  • Process representations are representations. Statements about how ESG factors are integrated e.g., "we engage with investee companies on climate risk" or "we conduct regular ESG monitoring" are themselves representations that must have reasonable grounds and be applied in practice. This is directly relevant to the Fiducian case.

  • Scope and carve-outs must be disclosed prominently. If ESG screens apply only to part of a portfolio (e.g., direct equities but not fixed income or derivatives), this must be made clear. Burying carve-outs in fine print while making broad claims in headlines is another ASIC concern.

  • Forward-looking ESG statements require reasonable grounds. This aligns with the Santos judgment: any statement about future ESG outcomes, targets or commitments in a PDS must be based on reasonable grounds at the time of publication, and the onus sits with the issuer.

  • Ongoing review obligations. A PDS is a living document. As new information becomes available (including from mandatory sustainability reports) issuers must consider whether existing PDS representations remain accurate and update them where necessary.

Mandatory Climate Reporting: Key Watchpoints for PDS Managers

Australia's mandatory climate reporting regime (applying progressively from FY2025) creates new intersection points between sustainability reports and PDSs. Key tensions to manage include:

  • Alignment between documents: Representations in a PDS about climate risk management or ESG credentials must be consistent with the data and disclosures in the entity's sustainability report. Inconsistency between the two, even if each document is individually defensible, could create greenwashing exposure.

  • Cross-referencing risk: Incorporating sustainability report content into a PDS (or vice versa) by cross-reference can import the liability regime of one document into the other. For example, if a PDS incorporates Climate Statement material, that incorporated material becomes part of the PDS. The modified liability protections available for forward-looking climate statements do not automatically extend to PDS disclosures.

  • IMA alignment: Representations about climate risk management and ESG targets must be supported by the actual terms of Investment Management Agreements. If the IMA does not require the investment manager to apply those screens or pursue those targets, the PDS representation may lack reasonable grounds.

  • Updating obligations: Mandatory reporting will generate new, publicly available data about a fund's climate exposure and performance against targets. Issuers need processes to review this information and update PDSs where existing representations are no longer accurate.

  • Language refresh: PDSs may need to be updated to align the principles and terminology used with AASB S2, particularly around scenario analysis, climate-related risks and opportunities, and Scope 1, 2 and 3 emissions.

Practical Tips

When Preparing Public-Facing ESG Representations

  • Apply your policies in practice - not just on paper. ASIC will look at actual portfolio holdings, not just stated exclusion lists.

  • Put in place appropriate controls for externally managed investments - you cannot simply delegate and disclaim.

  • Pay heed to customer complaints - complaints about ESG alignment are a red flag that your representations may not match reality.

  • Avoid broad or ambiguous terms - words like "sustainable", "green", "responsible" and "ethical" can carry legal weight and must be substantiated.

  • Avoid absolute claims - "zero emissions", "fully sustainable" and similar absolutes are high risk.

  • Ensure headline claims are scoped clearly and that any carve-outs are prominent, not buried.

  • When describing investment screens, be clear about scope - which asset classes, which managers, and which thresholds.

  • Do not overstate the nature or scope of your responsible investment activities.

Verification

Verification (in the legal sense) means confirming a statement is true or, for future matters or opinions, that it has reasonable grounds. Practical steps include:

  • Tailoring supporting documentation to the nature of each claim (factual claims require different evidence from forward-looking ones)

  • Establishing a clear sign-off process before any ESG representation is published

  • Documenting the basis for each representation at the time it is made - not retrospectively

Final question

If you pulled your PDS ESG representations out today and tested them against what your investment managers are actually doing, would they hold up?

Not in theory, not based on what the IMA says but based on what is happening in the portfolio right now.

That's the question regulators are increasingly asking. And based on the trajectory of enforcement action, it's one worth asking yourself before someone asks it for you.

Many thanks to Jillian Button, Emily Turnbull and Julia Clemente from Allens for a rigorous and practical session, and to all participants in the Mayflower PDS Managers Roundtable for the conversation.