Australia Securities Commission Fines Northern Trust Asset Management $20,000 for Greenwashing by Making False & Misleading Statements of NT World Green Transition Index Fund, Claimed to Exclude Companies with More than 5% Annual Revenues from Thermal Coal-Based Power Generation & Score of 3 or 4 in Low Carbon Transition Management, Invested in DTE Energy, NiSource & Power Assets Holding
Issues Infringement Notices to
27th December 2023 | Hong Kong
The Australian Securities & Investments Commission (ASIC) has fined Northern Trust Asset Management $20,000 (AUD 29,820) for greenwashing by making false & misleading statements of NT World Green Transition Index Fund, claiming to exclude companies with more than 5% annual revenues from thermal coal-based power generation and having a score of 3 or 4 in low carbon transition management. The NT World Green Transition Index Fund invested in DTE Energy, NiSource & Power Assets Holding. Australian Securities & Investments Commission (ASIC): “Northern Trust has paid $29,820 to comply with two infringement notices issued by ASIC regarding concerns about alleged false and misleading statements about the application of a Carbon Emissions Exclusion Screen. Northern Trust is the Investment Manager of the NT World Green Transition Index Fund (the Fund). The Product Disclosure Statements (PDSs) of the Fund claimed to exclude companies that ‘derive 5% or more of their total annual revenues (either reported or estimated) from thermal coal-based power generation’ and have a score of 3 or 4 in the low carbon transition management score quartile. ASIC was concerned the information in the PDSs was misleading because the Carbon Emissions Exclusion Screen was not properly applied.” In November 2023, ASIC Deputy Chair Sarah Court Faicd termed greenwashing as simply misleading & deceptive conduct with marketing campaigns to promote non-genuine net zero or carbon neutral investments to investors, citing recent cases on Mercer & Vanguard. More info below:
“ Australia Securities Commission Fines Northern Trust Asset Management $20,000 for Greenwashing by Making False & Misleading Statements of NT World Green Transition Index Fund, Claimed to Exclude Companies with More than 5% Annual Revenues from Thermal Coal-Based Power Generation & Score of 3 or 4 in Low Carbon Transition Management, Invested in DTE Energy, NiSource & Power Assets Holding “
ASIC Deputy Chair Sarah Court: “ASIC was concerned that investors may have been misled by statements that certain energy companies would be excluded, when they were not. In this case, the exclusions and screenings were outsourced to a third-party company without significant oversight by Northern Trust. We want to stress that as the publisher of these statements, it is the company itself who is responsible for them, not the third party applying the exclusions. Effective oversight of third parties is essential to avoid misleading investors.”
Australia Securities Commission Fines Northern Trust Asset Management $20,000 for Greenwashing by Making False & Misleading Statements of NT World Green Transition Index Fund
19th December 2023 – ASIC has taken action for greenwashing against Northern Trust Asset Management Australia Pty Ltd (Northern Trust). Northern Trust has paid $29,820 to comply with two infringement notices issued by ASIC regarding concerns about alleged false and misleading statements about the application of a Carbon Emissions Exclusion Screen.
Northern Trust is the Investment Manager of the NT World Green Transition Index Fund (the Fund). The Product Disclosure Statements (PDSs) of the Fund claimed to exclude companies that ‘derive 5% or more of their total annual revenues (either reported or estimated) from thermal coal-based power generation’ and have a score of 3 or 4 in the low carbon transition management score quartile. ASIC was concerned the information in the PDSs was misleading because the Carbon Emissions Exclusion Screen was not properly applied. At least three companies were not excluded by MSCI despite the fact they failed the low carbon transition management score quartile. This meant there was an error in applying the Carbon Emissions Exclusion Screen. The affected holdings included:
- DTE Energy
- NiSource; and
- Power Assets Holding
This issue occurred from around 1 December 2022 to 28 July 2023. Northern Trust subsequently disposed of the holdings. Northern Trust paid the infringement notices on 19 December 2023. Payment of an infringement notice is not an admission of liability. The specific reasons for ASIC’s concerns are set out in the two infringement notices which have been published on the Credit and ASIC Act infringements notices register.
Background
- ASIC has issued infringement notices in response to concerns about alleged greenwashing against Tlou Energy Limited (22-294MR), Vanguard Investments Australia (22-336MR), Diversa Trustees Limited (22-379MR), Future Super Investment Services Pty Ltd (23-110MR) and Black Mountain Energy (23-001MR).
- ASIC currently has three greenwashing / ESG civil penalty cases before the Federal Court: Mercer Super (23-043MR); Vanguard Investments Australia (23-196MR), and Active Super (23-215MR).
- ASIC’s Information Sheet 271 (INFO 271) provides information for responsible entities of managed funds and super fund trustees about how to avoid greenwashing when offering or promoting sustainability-related or ethical products and investments.
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