ASIC’s second win for greenwashing civil penalty proceedings: a record $12.9 million penalty against Vanguard

On 25 September 2024 the Federal Court of Australia ordered Vanguard Investments Australia (Vanguard) to pay a pecuniary penalty of $12.9 million for making misleading claims about environmental, social and governance (ESG) exclusionary screens. This decision against Vanguard marks the Court’s highest penalty imposed for greenwashing conduct to date. 

The Federal Court’s decision is ASIC’s second successful greenwashing action, following the $11.3 million civil penalty ordered against Mercer Super in August this year (see our article here, which also compares enforcement activity against greenwashing internationally).This article serves as an important reminder on Australia’s regulatory emphasis combatting greenwashing practices and provides useful guidance for businesses on how the Court determines the size of appropriate civil penalties for greenwashing.

ASIC’s civil proceedings against Vanguard 

The penalty follows Vanguard’s admission to engaging in conduct that was liable to mislead the public, and to making representations that were false or misleading, in relation to the purported ESG screens which were applied in the Vanguard Ethically Conscious Global Aggregate Bond Index Fund (Hedged) (Ethically Conscious Fund). ASIC has reported that the total funds or assets under this fund was over $1 billion (as of 26 February 2021). 

The Federal Court found that Vanguard contravened ss 12DF and 12DB(1)(a) and (e) Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by making false or misleading statements about its Ethically Conscious Fund, through various public representations that: 

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