ASIC has been successful in its Federal Court proceedings against Vanguard Investments Australia (Vanguard) in relation to Vanguard’s misleading promotion of an ethical bond fund.

Key takeaways

  • ASIC is taking greenwashing seriously, with a particular focus on monitoring climate related disclosures in relation to the sale of financial products.[1]
  • Language such as “ethical”, “green”, “clean” must be rooted in truth in reflection of the applicable products.
  • We expect the ACCC to follow suit shortly– it has made clear it will have a sustained focus on greenwashing[2] in the context of engaging in misleading or deceptive conduct or false or misleading representations about goods or services for the purpose of the Australian Consumer Law. The ACCC has issued Greenwashing Guidance to assist businesses identify what may constitute greenwashing.

Summary of the Federal Court decision

On 28 March 2024 the Federal Court handed down its decision that Vanguard made various representations in contravention of the ASIC Act in relation to its promotion of an ethical bond fund product.[3] Investors in the fund included institutional, wholesale and retail investors.

Relevant representations were made across several forms of communication to the public. Vanguard admitted that particular statements it had made conveyed representations that (at [52]):

(a)     the Fund offered an ethically conscious investment opportunity and the Fund did this by tracking the Index;

(b)      before being included in the Bloomberg SRI Index, and therefore the Fund, securities were researched and screened against applicable ESG criteria; and

(c)      securities that violated applicable ESG criteria were excluded or removed from the Index and therefore the Fund.”

Vanguard admitted almost half the securities in the Index were not screened against the ESG (Environmental, Social, Governance) criteria (as at the last date of the period it was alleged the representation had been made). Further, the relevant fund included issuers that violated Vanguard’s applicable ESG criteria.

The Court made declarations to the effect that during the relevant period, Vanguard:

  1. Contravened s12DF(1) of the ASIC Act by engaging in conduct in relation to financial services that was liable to mislead the public as to the nature, the characteristics and the suitability for their purpose of those financial services
  2. Contravened s 12DB(1)(a) and (e) of the ASIC Act by making representations in connection with the supply (or possible supply) of financial services that were false or misleading in representing that the Fund and interests in it were of a particular standard, quality or grade, and had certain performance characteristics or benefits.

The proceedings are listed for a penalty hearing on 1 August 2024.

Further information / assistance regarding the issues raised in this article is available from the author, Natalie Oliver, Special Counsel and James Davis, Lawyer or your usual contact at Moray & Agnew.

[1] Australia Government: “Climate-related financial disclosure” Consultation Paper (June 2023) -
[2] Australian Competition and Consumer Commission “The ACCC's expectations for corporations making green claims at the General Counsel Summit | ACCC” (8 August 2023).
[3] Australian Securities and Investments Commission (ASIC) v Vanguard Investments Australia Ltd [2024] FCA 308.