ASIC initiates legal action against Vanguard Investments Australia for greenwashing

Vanguard Investments Australia was found in violation of the law by the Federal Court for making false statements about the environmental, social, and governance (ESG) exclusionary screening that were applied to investments made in Vanguard index funds.

On March 8, 2024, during a hearing before Justice O'Bryan, Vanguard acknowledged engaging in deceptive behavior. On March 28, Justice O'Bryan determined that Vanguard had violated the ASIC Act on many occasions by misrepresenting the ESG exclusionary screens in a number of communications, such as media releases, web presentations, and product disclosure statements. The investments made by the Fund were based on an index that, according to Vanguard, excluded certain industries, such as fossil fuels, although a sizable percentage of the securities did not meet ESG standards.

The case is significant since it is ASIC's first greenwashing court outcome, according to Deputy Chair Sarah Court of ASIC, who also underscored Vanguard's admission of deceiving investors. At a hearing on August 1, 2024, the penalty for Vanguard's actions will be decided.

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