ASIC accuses $11 trillion investment giant Vanguard of greenwashing

However, the regulator claims research was not completed for a number of bond issuers included in Vanguard’s index, and that the product exposed investor funds to investments with links to fossil fuels, oil and gas exploration.

The regulator alleges that investor funds were exposed to companies like Abu Dhabi Crude Oil Pipeline LLC and Chevron Philips Chemical.

ASIC deputy chair Sarah Court said that consumers and investors were increasingly looking for ethically conscious investment products, and that consumers have to be able to rely on what they are told about how their funds are invested.

“If they can’t rely on it, it’s important that regulators take action,” she said.

She said the topic of greenwashing was an enforcement priority for ASIC. “We have a number of matters currently under investigation.”

Vanguard Investments Australia said that it self-identified an issue with its disclosure to investors about how its exclusionary screens worked, and that the company acted swiftly to update its disclosure documents.

“At the time, the description of the exclusionary screens did not provide a sufficiently detailed explanation that certain debt issuers lacking research coverage were still included in the benchmark. As a result, it is possible the portfolio held exposure to certain securities that may not have been reasonably expected by investors,” the company said.

“The issue was self-identified and self-reported to ASIC, and as soon as the disclosure weakness was identified, Vanguard acted swiftly to inform investors and enhance the disclosure. We have fully cooperated with ASIC’s queries on the matter since it was first self-reported.”

This is the second time ASIC has taken action against Vanguard over greenwashing claims, having fined the investment manager $39,960 in 2022 over disclosure documents for another fund that claimed to exclude companies involved in significant tobacco sales.