ASIC defines greenwashing as “the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly,sustainable or ethical.”
The regulator claims the firm’s screening process for one of its funds was more limited than what had been represented to investors,and that consumers who had a stake in the fund may have been exposed to investments with ties to fossil fuels despite the company pledging to exclude these.
Vanguard said on Tuesday it had identified and self-reported a breach in relation to disclosures for its Vanguard Ethically Conscious Global Aggregate Bond Index Fund and ETF in 2021. As of February 26,2021,the total funds or assets under management of the fund was over $1 billion.
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“There was never any intention to mislead,but Vanguard recognises it has not lived up to the high standards it holds itself accountable to and apologises for the concern this matter may cause for our clients,” the company said in a statement.
ASIC’s greenwashing case centres on the methodology that Vanguard used to research the environmental,social and governance credentials of investments with the aim of screening out ones that did not fit with the fund’s aim.
The fund was marketed to investors wanting ethically conscious investments,and Vanguard had claimed the index did not include businesses in a range of industries,including those with exposure to fossil fuels,ASIC said.