ESG Enforcement Tracker

Key facts:

ASIC has initiated civil penalty proceedings in the Supreme Court of NSW against FIMSL, alleging governance failures and misleading conduct in relation to its management of the Diversified Social Aspirations Fund (the Fund). The Fund, marketed as an ESG-focused investment option, operated between 2015 and 2024 and was designed to appeal to socially responsible investors.

ASIC alleges that FIMSL failed to act with care and diligence as a responsible entity under the Corporations Act 2001 and misrepresented the Fund’s ESG approach in its Product Disclosure Statement (PDS). In particular, ASIC claims that the Fund’s actual investment processes did not align with the ESG methodology described in the PDS, and that FIMSL lacked the necessary information and controls to monitor underlying investments. The PDS included statements about avoiding harmful industries and monitoring ESG compliance, which ASIC alleges were false and misleading.

Further, ASIC contends that FIMSL failed to review underlying investments, update compliance documents to address ESG risks, engage ESG expertise, and respond appropriately to investor complaints about holdings inconsistent with the Fund’s stated principles. Examples of such holdings include investments in BHP Billiton, Rio Tinto, and Woodside Petroleum.

ASIC Deputy Chair, Sarah Court, stated that responsible entities must ensure governance standards and ESG representations are accurate and transparent. ASIC is seeking declarations, pecuniary penalties, and adverse publicity orders against FIMSL.

This case marks ASIC’s fourth greenwashing civil penalty action and its first against a responsible entity for governance failures.