ASIC takes first compliance action over greenwashing

An Australia-based energy company which is developing power projects in parts of Africa has become the first entity to be hit with compliance action by the corporate regulator for greenwashing.

Tlou Energy Limited, which is listed on the Australian stock exchange and based in Brisbane, has paid $53,280 after the corporate regulator issued it with four infringement notices over allegedly misleading sustainability-related statements.

ASIC is turning up the heat on corporate greenwashing.Credit:Jessica Shapiro

The infringements represent the first time the Australian Securities & Investments Commission has taken action over greenwashing, a term which refers to misleading or misrepresenting the extent to which something is environmentally friendly, sustainable or ethical.

The regulator announced a crackdown on greenwashing as part of its priorities earlier this year as consumers shift towards greener options. It warned on Thursday that a number of other listed companies, super funds and managed funds were also being investigated over their green claims.

ASIC said four statements made by Tlou Energy to the ASX in October last year claimed that electricity produced by Tlou would be carbon neutral; that the company had environment approval and capability to generate some electricity from solar power; and that its gas-to-power project would be “low emissions”.

The statements also claimed that the company was equally concerned with producing “clean energy” through the use of renewable sources as it was with developing its gas-to-power project, ASIC alleges.

“ASIC was concerned that Tlou either did not have a reasonable basis to make the representations, or that the representations were factually incorrect,” the regulator said in a statement on Thursday.

The infringement notices were paid on October 25, and the regulator stressed that the payment did not represent an admission of guilt or liability. Tlou Energy, which is developing gas-fired power, solar and hydrogen projects in Sub-Saharan Africa and Botswana, has been contacted for comment. The company was founded in 2009 and has a market cap of $15 million.

ASIC deputy chair Sarah Court said on Thursday that as entities promote sustainability and green practices, they also have to ensure they can support those statements. She urged companies to make sure their communication to shareholders, members and the broader market was accurate and has a reasonable basis.

“Companies are on notice that ASIC is actively monitoring the market for potential greenwashing and will take enforcement action, including Court action, for serious breaches,” Court said.

Earlier this year, the regulator said that smaller companies preparing to list on the Australian Securities Exchange were having their net-zero credentials questioned, after ASIC noticed firms making ambitious climate-change promises without the substance to back them up.

The Australian Competition and Consumer Commission is also cracking down on dodgy sustainability claims, announcing earlier this month that it would be analysing hundreds of company websites to check whether consumers were being deceived.

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