ESG Enforcement Tracker

In November 2023, ASIC issued two infringement notices against Northern Trust regarding allegations of 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 Public Disclosure Statement (PDS) of the Fund purported 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.

Despite what was stated in the PDS, the Fund held securities in three companies contrary to the Carbon Emission Exclusions methodology. The improper screening raised ASIC’s concern, as “investors may have been misled by statements that certain energy companies would be excluded, when they were not” (ASIC Deputy Chair, Sarah Court).

In this case, Northern Trust used a third party to apply the exclusion and screening process. ASIC highlighted that in such circumstances, the company itself is responsible for having proper oversight to avoid misleading investors.

Northern Trust paid AUD$29,280 on 19 December 2023 to comply with the infringement notices.