While Australian super funds have been active in pressuring companies about their green credentials, they are now coming under pressure themselves from regulators.

Funds face increasing scrutiny from the Australian Securities and Investments Commission (ASIC) on any green credentials they have used to market their funds, with well respected players such as Vanguard, Mercer and Active Super* now under the uncomfortable spotlight of court action.

The corporate regulator has taken court action against them and has been warning others that it is going through websites and statements for instances where the investments they hold don’t meet the marketing stances.

At the same time the bigger super funds are facing the prospect of mandatory climate change reporting which could start as early as July next year.

Exactly how extensive mandatory reporting will be, and which big companies and funds will be required to report first, is still being decided by the Federal Government.

Expectations are that mandatory reporting will be phased in, starting with big ASX-listed companies and potentially the larger super funds.

The government could decide to hold off super funds in the first phase – but the funds know they are on notice.

In short, while super funds have been the ones pressuring the companies they are investing in to step up their green credentials – one of the most high profile being last year’s push by health industry super fund HESTA on electricity company AGL to step up its exit from coal fire power, backing Atlassian co-founder Michael Cannon-Brookes – the spotlight has been turned on the funds themselves as the supplier of major players in the financial system, and many are finding themselves uncomfortable in the glare.

ASIC has elevated its crackdown on “greenwashing” to a strategic priority getting extra funding in the last Budget to step up its scrutiny of the green claims of companies and funds.

The moves have been embarrassing for the super funds targeted so far.

In the latest action, ASIC has begun civil penalties in the Federal Court against Active Super, alleging misleading conduct and misrepresentations to the market relating to claims it was an ethical and responsible superannuation fund.

The specific action taken is a clear warning to other funds who are on notice to comb through all their marketing documents.

ASIC says Active “represented on their website that they eliminated investments that posed too great a risk to the environment and the community, including tobacco manufacturing, oil tar sands and gambling” and that they had added Russia to their list of excluded countries, following the invasion of Ukraine.

Yet ASIC has been able to argue that the fund’s holdings included gambling companies Skycity Entertainment, PointsBet, The Star Entertainment, The Lottery Corporation and Tabcorp Holdings Limited; tobacco-packaging company Amcor; Russian entities Gazprom and Rosneft Oil Company; oil tar sand company, ConocoPhillips; and coal mining companies Coronado Global Resources, New Hope and Whitehaven Coal Limited.