Federal Court Of Australia Imposes $7.4 Million Penalty On Mercer Super For Misleading ESG Claims

Federal Court Of Australia Imposes $7.4 Million Penalty On Mercer Super For Misleading ESG Claims

The country’s corporate regulator had accused the firm of having holdings in the largest carbon emitter and top alcohol producer

The Federal Court of Australia has fined Mercer Super A$11.3 million ($7.4 million) for wrongful claims of the pension fund's environmental, social and governance (ESG) investments.

The proceedings against Mercer were initiated by the Australian Securities and Investments Commission (ASIC) in 2023 for misleading the public on claims of environment-friendly investment and products.

Sarah Court, the deputy chair of the ASIC held, “The contraventions admitted by Mercer are serious. They arose from failures to implement adequate systems to ensure that ESG claims in relation to its superannuation products were accurate.”

Mercer accepted the court's decision about its five marketing statements. While adding that members' funds would not be used to pay the fine, the firm stated, "We have cooperated with ASIC and undertaken a comprehensive review of our internal marketing processes and procedures.”

In February last, the corporate regulator referred to the pension fund's website contents that claimed its seven ‘Sustainable Plus’ investment options were perfect for members deeply committed to sustainability.

However, the ASIC alleged those investment options had holdings in AGL Energy, Australia's largest carbon emitter, top alcohol producers such as Carlsberg, and companies engaged in gambling, which contradicted its claims of ‘sustainability’.