Amid global scepticism about the ability to achieve net zero emissions by 2050, local super fund bosses are cautiously optimistic they can still get there.
A snap poll conducted at the Investment Magazine Chair Forum in Sorrento, Victoria last week – attended by about 40 chairs, deputy chairs and investment committee chairs at industry and retail funds – found they all believed they would meet their net zero commitments, although a majority (63 per cent) admitted it would “be hard”.
But none indicated they had “no chance” of honouring their decarbonisation commitments.
ASIC deputy chair Sarah Court told the forum that was good news for any that had made firm public commitments, as the regulator moves to litigate against so-called greenwashing – when firms make misleading claims about their portfolio exposures or ESG credentials.
When asked whether these pledges could be skirting on false and misleading conduct if unfulfilled, she said: “It could, but I’m not saying it would.”
What the regulator wants is not that complicated, she said.
“We recognise that [the net zero pledge] is a forecast and it’s imprecise. All sorts of things can get in the way, so we’re not obtuse to these issues, and we’re genuinely not unreasonable people,” Court said.
“If you’ve got a business plan, you’ve got investments that are being made, you’ve had an expert come in that says ‘look, here’s your path to net zero by 2030’ – we’re happy with it.
“As long as it’s all genuine, and you haven’t just put it together when we’ve come knocking.”
The regulator took action last year against so-called greenwashing activity by Mercer, Vanguard, Active Super and Future Super. Many funds have treated it as a sign to up their compliance and communications efforts, with Cbus CEO Kristian Fok saying ASIC will “come down like a ton of bricks” on those failing to do so.
Court urged funds not to throw around descriptions like “carbon neutral”, “clean”, or “green” without reasonable ground just because it’s what the competitors are doing.
“You can’t just go out and say the same thing, if you’ve done nothing,” she said.
“You can’t – when there’s been a big glossy brochure on the back of a bus that says ‘invest with us, no exposure to fossil fuels’ – have a little asterisk pointing to somewhere on page 96 of the disclosure document that says, ‘Oh actually, we can invest up to 10 per cent’.”
Testing the bounds
Court echoed APRA deputy chair Margaret Cole’s comments at the same event that funds remain on the hook even in cases where the non-compliant service is provided by a third party. These operational areas include but are not limited to fund administration, complaints handling and marketing.
Insurance claims handling is one of the epicentres of complaints, and Court said some funds have suggested the problem comes from delays due to administrative outsourcing.
“But this is not an answer to the issue,” she said.
“It is the trustee that has the legal responsibility to ensure it can meet the legal obligations owed to members, irrespective of the administrative arrangements the fund chooses to adopt. The legal obligations on trustees cannot be outsourced.”
Looking into the new year, Court said member service negligence and failure to protect superannuation balances, alongside greenwashing, will receive more scrutiny from ASIC.
“We have also indicated publicly that we will take on cases where the outcome is not guaranteed, and we will test the bounds of the law where it is uncertain or open to interpretation.”