Sarah Court

ASIC claims “competition among super funds for new members” may have inspired allegedly misleading claims by Active Super about its exposure to tobacco, fossil fuel and Russia-domiciled investments on its website and social media.

The corporate regulator on Friday announced it has commenced civil penalty proceedings in the Federal Court against LGSS Pty Limited, now known to the public as Active Super, alleging misleading representations to the market relating to ethical and responsible investing claims.

ASIC’s case will argue that between February 2021 and June this year, Active Super held positions in 28 investments, either directly or indirectly, which exposed members to securities it claimed on its website to restrict, including those involved in tobacco manufacturing, oil tar sands and gambling, as well as Russian stocks, which have been widely dumped on ethical grounds since the invasion of Ukraine in February 2022.

The divestment followed strong urging from the previous Coalition government in March last year, when then Treasurer Josh Frydenberg argued removing Russian exposures from Australian portfolios would send a “clear and unequivocal signal that we condemn in the strongest possible terms Russia’s unprovoked and unjustified attack on Ukraine”. The edict led to, for example, the Future Fund dumping an estimated $200 million worth of Russian assets.

ASIC alleges that a notice on Active Super’s website claimed that Russia had been added to the fund’s list of excluded countries. However, ASIC’s analysis found Active’s portfolios held shares in Russian energy giants Gazprom and Rosneft, both of which have ties to the regime of President Vladimir Putin.

The regulator also alleges Active held securities in gambling companies including PointsBet, The Star and Tabcorp; miners ConocoPhillips, Coronado, New Hope and Whitehaven Coal; and packaging giant Amcor, which is understood to be involved in the supply chain for tobacco products.

In a statement to the press, Active Super said that it co-operated with ASIC’s investigation and supported “increased scrutiny on ESG disclosure standards as being good for members, the super industry and the community”. It said it was unable to comment further since the matter is now before the courts.


The fund in June signed a heads of agreement with Vision Super about a merger, which would form a new fund with $27 billion under management and 170,000 members across NSW and Victoria.

It previously received accolades from the Responsible Investment Association Australia for its apparent commitment to ESG outcomes. In September last year, Active Super head of responsible investment Moya Yip said: “In 2001 we were the first Australian super fund to stop investing in tobacco manufacturers, in 2009 we were among the first investors to focus on climate change risk, in 2014 we introduced climate change and fossil fuel reserve restrictions, and in 2020 we made a commitment as a super fund to reach net zero carbon emissions by 2050”.

It has also been a participant in shareholder activism on environmental issues, such as joining a consortium that sought to frustrate Rio Tinto’s relationship with mining sector lobbyists such as the Minerals Council of Australia, supported by 18 per cent of the big miner’s register.

Trustees and their representative associations are understood to be taking the regulatory push on greenwashing seriously, as they await more consensus from regulators and global governance bodies on agreed definitions and categories relating to ethical and responsible investing.

Critics have voiced concerns about instances of so-called “greenhushing”, referring to funds removing ESG claims from previously public communications.

The regulator has previously taken action against Vanguard and Mercer Super as part of its anti-greenwashing campaign over the past year.

ASIC deputy chair Sarah Court said competitive tension between funds as the market contracts due to merger activity could be a factor in the rise of so-called greenwashing activity.

“There is much competition among super funds for new members, and we know that funds seek to attract members with promises their investments will not be exposed to certain industries,” she said.

“When making these claims super funds must have evidence to back their claims and ensure they are not promising exclusions that they cannot guarantee.”

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