ASIC accuses Vanguard of greenwashing in $1b-plus bond fund
The corporate watchdog has accused fund management giant Vanguard of misleading investors in its $1 billion-plus ethical bond product about the sustainability of its assets.
In the Australian Securities and Investments Commission’s second major greenwashing case this year, it alleged Vanguard had not screened out certain investments by the bond fund against ESG criteria as promised.
ASIC claimed that Vanguard had failed to do its due diligence. AP
Despite promising consumers its ‘Ethically Conscious Global Aggregate Bond Index Fund (Hedged)’ did not invest in bond issuers with significant business activities in a range of industries, including those involving fossil fuels, it was actually invested in activities linked to oil and gas exploration.
Its ASIC’s first case related to funds’ screening processes and will be a wake up call for the slew of superannuation and managed funds that rely on “green screening” to ensure investment portfolios are ethical.
The case comes as both ASIC and the consumer watchdog pledged to crack down on this sort of misconduct as a key enforcement priority.
ASIC already launched amajor greenwashing action against retail superannuation fund Mercer in March, alleging it misled members of its Sustainable Plus fund by claiming it excluded investments in “companies involved in carbon-intensive fossil fuels”, alcohol production and gambling.
It also warned at the time that it wasinvestigating several superannuation funds for greenwashing and suspected these matters will result in court action. It has already slapped Vanguard with around $40,000 in fines over a separate greenwashing case.
In the latest case, ASIC alleged that the Vanguard bond fund, which was based on the Bloomberg Barclays MSCI
Read more on afr.com
