ASIC threatens a greenwashing cleanout

THE corporate watchdog is getting ready to clamp down on alleged “greenwashing” by listed mining companies in Australia.
ASIC threatens a greenwashing cleanout ASIC threatens a greenwashing cleanout ASIC threatens a greenwashing cleanout ASIC threatens a greenwashing cleanout ASIC threatens a greenwashing cleanout

ASIC indicated it would clamp down on ESG reporting across the mining sector.

Paul Hunt

Senior Journalist: Energy & Commodities

Paul Hunt

 

The declaration from the Australian Securities and Investments Commission was made at a Clean Energy and Climate Forum hosted by the Minerals Council of Australia this month.

Greenwashing, as defined by ASIC, is the embellishment of a company's corporate, social or environmental credentials.

The commission claims incidents of greenwashing have increased as investors look for companies offering high standards of environmental, social and governance practices.

Speaking at the forum, ASIC commissioner Cathie Armour said the commission was working to achieve "best practice" controls to mitigate greenwashing by listed mining and oil and gas companies.

"ASIC is cognisant that current investor focus on climate change and climate action may provide incentives and opportunities for companies to engage in greenwashing," she said.

Armour said ASIC believed greenwashing was becoming more prominent among mining and oil and gas companies due to a lack of standardisation across disclosure reporting.

She said companies were making false representations that were misleading investors.

Mining companies and oil and gas listed entities are not required to have a fully-fledged plan on how they will mitigate climate risk and offset emissions. However, they are required to have ample evidence that they are developing such plans, if they announce them.

Armour warned that companies were being quick to announce their intentions to achieve carbon neutrality or net-zero emissions, without a plan or "reasonable basis".

"We plan to continue to monitor this area, consistent with our statutory mandate," she said.

The regulator used the speech at the forum to call on listed mining companies to adopt recommendations from the G20 Financial Stability Board, which released a climate-related financial disclosures report in 2017.

Only 58% of ASX100 companies have implemented the TCFD framework into their disclosure reporting.

"Some companies are much further along than others," Armour noted.

Aside from the G20 report, ASIC is also working closely with the International Organisation of Securities Commissions to implement a plan to tighten the rules over climate change reporting and mitigation efforts.

Details of the plan are yet to be released, however, according to a recent IOSC report the problem of greenwashing when it comes to net zero targets and climate change mitigation is becoming more prevalent across industries including mining, worldwide.

It is not known when ASIC will begin its crackdown on listed companies.

The report from the IOSC found potentially billions of dollars of investors' money was being allocated each year to "green" stocks, however, those companies often did not have a plan to actually implement their climate related ESG commitments.