Warning of a crackdown on greenwashing ESG credentials

Queensland’s largest law firm has flagged warnings on the crackdown on ‘Greenwashing’ environment, social and governance (ESG) credentials. The issue has been outlined in the latest McCullough Robertson Lawyers ‘Emerging Issues for the Australia resources Industry’ publication. The highest profile example of Greenwashing was Volkswagen being exposed for fudging the figures on its emissions output. ESG credentials and sustainable manufacturing practices are not only set to appease the regulator, they are in increasing cases, a shareholder precondition. Greenwashing may breach misleading or deceptive conduct prohibitions contained in the Australian Consumer Law, the Corporations Act and the ASIC Act 2001 (Cth), and expose directors to risks including prosecution and shareholder backlash the report said. Kate Swain - Partner and Leading Environment and Planning Lawyer McCullough Robertson Members of the mining industry needed to ensure they are up to the mark when it came to meeting standards said McCulloch Robertson partner, Kate Swain. “Greenwashing is where a company might look to spruik its environmental sustainability credentials or climate change position, when it's not supported by their underlying conduct, or they aren't actually taking sufficient action to achieve the credentials that they're spruiking,” Ms Swain said. “Greenwashing is certainly a big issue and we've seen it. In other industries, such as Volkswagen cheating on their emissions testing and there are current proceedings in the Federal Court with Santos claiming that their natural gas is clean fuel. “That's the type of greenwashing issues that we're seeing at the moment in the market and the ACCC is cracking down. It's certainly an issue that the industry is facing and needs to be aware of.” ASIC Crackdown The Australian Securities and Investment Corporation (ASIC) had been refining its enforcement action on Greenwashing said Ms Swain.“They've certainly released policies and positions on it over the last few years,” she said. “So, they're making it very clear that it won't be accepted, and you can't mislead the market or provide false or misleading conduct, in that space, because they are aware of it. “And it's a difficult space to be in terms of actually having supporting evidence of what you're stating. “But it is critical that if you are going to, for example, claim that your natural gas is clean, then you need to be able to support how that is the case. Or similarly for Volkswagen in terms of their emission testing. It's just not acceptable to have false statements behind that.” Shareholder action The report cites the cases of Santos currently facing a potential landmark claim, with shareholders commencing proceedings in the Federal Court of Australia (Federal Court) over misleading claims, for example, that Santos provides ‘clean energy’ because natural gas is a ‘clean fuel’. The shareholders also claim Santos’ net- zero strategy to be misleading because it is unevidenced and based on misinformation. Generally, there was a lack of case law on Greenwashing said Ms Swain. “I think we will see a test case, whether it is in Australia or internationally, in the next few years, and more cases that will follow. So yes, it's still an evolving area.”

Warning of a crackdown on greenwashing ESG credentials

Industry Queensland

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