ESG Enforcement Tracker

Key facts:

In August 2023, ASIC commenced civil penalty proceedings in the Federal Court against LGSS Pty Limited (LGSS), alleging misleading conduct and misrepresentations to the market relating to claims it was an ethical and responsible superannuation fund.

LGSS is the trustee of Active Super – a superannuation fund with AUD$13.5 billion in assets. ASIC alleged that it had misrepresented Active Super’s investment portfolio to the market and investors. During the relevant period, LGSS had responsibility for the content displayed on the Active Super website as well as its social media postings and publications.

A liability hearing was listed in March 2024, with judgment handed down in June 2024. The judge found that LGSS had made false or misleading representations and had engaged in conduct liable to mislead the public in relation to investments made for the superannuation fund. He therefore held that ASIC was entitled to the declarations as to the contraventions of the Act which it sought, save in respect of the tobacco representations.

LGSS represented Active Super as an ethical superannuation fund, which provides responsible and sustainable investments for its members, and which incorporates consideration of ‘environmental, social and governance’ risks into its investment decisions. To achieve this, LGSS stated that Active Super placed certain companies on an investment restriction list for Australian equities and an investment restriction list for international equities.

More specifically, Active Super was said to have restricted investments and securities which compromised its environmental and social values (e.g. gambling companies, tobacco, weapon manufacturing, coal mining and Russian entities). However, contrary to these representations, Active Super held direct and indirect investments in companies such as SkyCity Entertainment Group Ltd (gambling), Gazprom PJSC (Russian entity), Shell Plc (Oil tar sands) and Whitehaven Coal (Coal mining).

A hearing was held in December 2024 to consider the appropriate form of declaratory relief. Mr Justice Callaghan handed down his judgment on 18 March 2025, in which he considered various factors, including the totality principle, to ensure that the “total penalty is just and appropriate and not excessive having regard to the totality of the relevant contravening conduct”. The judge took account of the fact that the LGSS had not adduced any evidence of the likely causes of the conduct and the fact that many of the submissions it made in its defence were contrived. Ultimately, he considered that a penalty of AUD$10.5 million was appropriate for the conduct identified, with no reductions required. LGSS was also made the subject of an adverse publicity order. Finally, LGSS was ordered to pay ASIC’s costs of the proceeding.