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Home Procurement

ASIC put fake ESG policies on notice with first company fine

admin by admin
October 31, 2022
in Procurement


Companies with false and misleading ESG policies have been put on notice after The Australian Securities and Investment Commission (ASIC) took its first action against “greenwashing” by fining a listed company.

Tlou Energy, which is focused on electricity generation in Botswana and the broader southern African region through the development of power projects and listed on the ASX, was fined $53,280.

The infringements were linked to allegedly false or misleading sustainability-related statements made to the ASX in October 2021.

Greenwashing is making false claims which mislead consumers into believing that a company’s products or approaches are environmentally friendly or have a greater positive impact on the environment. 

Tlou allegedly made claims including, electricity it produced would be carbon neutral, it had environmental approval and capability to generate certain quantities of electricity from solar power, as gas-to-power project would be “low emissions” and clean energy production the use of renewable sources as it was with developing its gas-to-power project.

These related to ASX announcements by the company on 16 February 2021 titled ‘Carbon Neutrality’ and 20 October 2021 titled ‘Clean Energy For Botswana and Beyond’.

ASIC’s investigation found Tlou either did not have a reasonable basis to make the representations or that the representations were factually incorrect. 

In response, Tlou said it “does not accept that it contravened any provision of the Corporations Act 2001 (Cth) or the Australian Securities and Investments Commission Act 2001 (Cth) but agreed to pay the infringement notice to bring this matter to an end.”

ASIC flagged greenwashing as a top priority earlier this year. 

ASIC Deputy Chair Sarah Court said, “As entities promote sustainability and green practices as part of their value proposition, they must ensure they can support those statements and have a reasonable basis for doing so.”

Ms Court urged companies and their advisers to ensure their communication to shareholders, members and the broader market is accurate and has a reasonable basis. ASIC has published advice of Information Sheet 271 (INFO 271) on how to avoid greenwashing. 

More fines for other companies could follow for other organisations, Ms Court said. 

‘ASIC is currently investigating a number of listed entities, super funds and managed funds in relation to their green credentials claims. Companies are on notice that ASIC is actively monitoring the market for potential greenwashing and will take enforcement action, including Court action, for serious breaches,’ Ms Court said.

 



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