ASIC to review ESG funds for greenwashing
The Australian Securities and Investments Commission (ASIC) has announced that it is conducting a review of environmentally focused investment funds. The regulator expressed its concerns over potential ‘greenwashing’, as demand for more ethical and environmentally friendly investments grows.
Sadly, greenwashing has been around for a long time. It refers to the misrepresentation of a product to make it seem more environmentally friendly.
The demand for good investments
In 2020 the Responsible Investment Association Australasia (RIAA) found that 86% of people in Australia expect their savings and superfund to be invested responsibly and ethically. Younger generations in particular said they would be more inclined to save and invest, if they knew their money was having a positive impact on the planet.
ASIC commissioner Cathie Armour writes in a statement that to meet this demand more funds are now offering ESG-focused investment products. That is investments offering positive impacts either environmentally, socially or through corporate governance. In other words, funds that are not harmful to the planet or people.
Greenwashing in the investment space
Whether a company is greenwashing or not can be quite hard to suss out, as culprits often spend a lot on shiny advertising campaigns focusing on just how green they are. That is rather than actually making any real changes to their business, or what they are selling that would have a positive impact on the planet.
ASIC is now concerned that this could be happening with investments, as ESG funds become more and more popular. Armour writes that there is growing unease around the world about the risks of greenwashing in the financial space. For this reason ASIC has also joined the Sustainable Finance Task Force established by the International Organisation of Securities Commissions. The task force is looking into greenwashing in the industry.
Regulators are also concerned about greenwashing as there is currently a lack of standardisation or clarity around what is labelled as an ethical investment. Greenwashing and a lack of clear labelling for ESG products, could lead people to invest in or sign up to funds that are not actually what they seem.
This latest review from ASIC follows on from the regulator's review of climate risk disclosures from large listed companies. While ASIC found that standards had improved, it did note that a number of disclosures had a significant marketing feel.
How to spot greenwashing
As we mentioned before, greenwashing is usually all fancy advertising and no substance. The problem is advertising can be quite convincing. In cases like these, the only thing to do is to try to dig beyond the marketing campaign.
Here are just some questions to ask yourself:
- Does the company explain in detail how its investment is environmentally friendly?
- Does it have fact sheets, testimonials from reliable sources and certifications from third parties?
- Is it B Corp certified? Does it have the tick of approval from Market Forces?
- Does the investment company clearly disclose its own carbon emissions and what it is doing to improve?
It will be interesting to see what ASIC finds in its review. In the meantime, if you are interested in diving into the share trading space, why not check out these online share trading platforms operating in Australia right now. Or, if you want to learn more about investing before you get going, have a read of Mozo’s share trading guides.
Compare online share trading accounts - rates updated daily
ASX Shares
Small trade brokerage
Monthly fee
$0.00$0.00Join the world’s leading social trading platform, trusted by 30 million users worldwide. Invest in stocks, crypto, ETFs and more - all in one place. Hone your financial skills with a $100K virtual demo account.
ASX Shares
Join the world’s leading social trading platform, trusted by 30 million users worldwide. Invest in stocks, crypto, ETFs and more - all in one place. Hone your financial skills with a $100K virtual demo account.
- Monthly fee
- $0.00
- Monthly fee waiver
- n/a
- Special offers
- -
- Brokerage details
- There are no brokerage charges but a 0.50% fee is applied to all funds paid into or taken out of the USD settlement account
- Settle from any bank account
- Settlement account offered
- Customer funds are held in a Trust Account managed by JP Morgan Chase and Co
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- $5 USD withdrawal fee applies and a $10 monthly inactivity fee is charged after 12 months with no login activity.
Read our Mozo Review to learn more about the ASX Shares
Share Investing
Standard
Small trade brokerage
Monthly fee
$0.00$0.00CMC Markets Invest makes it easy to trade with a handy web and mobile platform, competitive pricing and thousands of securities. Buy Australian and US shares from $0 brokerage (T&Cs apply - see website for full details).
Share Investing
CMC Markets Invest makes it easy to trade with a handy web and mobile platform, competitive pricing and thousands of securities. Buy Australian and US shares from $0 brokerage (T&Cs apply - see website for full details).
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- -
- Brokerage details
- $0 for trades up to $1,000. Greater of $11 and 0.1% for trades over $1,000.
- Settle from any bank account
- Settlement account offered
- ANZ Cash Account
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- -
Read our Mozo Review to learn more about the Share Investing
Tiger Account
Small trade brokerage
Monthly fee
$5.50$0.00Tiger Brokers is an online broker listed on NASDAQ. It offers access to US, ASX & HK stocks, ETFs and US options trading. Earn 7% p.a. on uninvested cash balance up to AUD 100,000 for the first 150 days, with a value up to AUD 2,877. Plus get US$30 Tesla (TSLA) and US$30 NVIDIA (NVDA) shares with an accumulated deposit greater than AUD 2000. T&Cs apply – for full details, go to the Tiger Brokers website.
Tiger Account
Tiger Brokers is an online broker listed on NASDAQ. It offers access to US, ASX & HK stocks, ETFs and US options trading. Earn 7% p.a. on uninvested cash balance up to AUD 100,000 for the first 150 days, with a value up to AUD 2,877. Plus get US$30 Tesla (TSLA) and US$30 NVIDIA (NVDA) shares with an accumulated deposit greater than AUD 2000. T&Cs apply – for full details, go to the Tiger Brokers website.
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- 7% p.a. on uninvested cash balance for 150 days valued up to AUD2,877. Plus get US$30 TSLA and US$30 NVDA shares with accumulated deposit more than A$2000. T&Cs apply.
- Brokerage details
- 0.055% of trade value, $5.50 minimum brokerage.
- Settle from any bank account
- Settlement account offered
- no
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- -
Read our Mozo Review to learn more about the Tiger Account
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.