Active Super Slapped with AU$10.5m Penalty for Breaching Ethical Investment Promises
"Gambling and Restricted Sector Investments Cost Ethical Fund AU$10.5m Fine"
In a surprising turn of events, the Federal Court of Australia has slapped Active Super with a massive AU$10.5 million (US$6.6 million) fine. The hefty penalty comes after Active Super, a fund boasting ethical superannuation investment, was found investing in sectors they had explicitly ruled out, such as gambling.
Despite advertising itself as an ethical fund on its website, impact reports, and product disclosure statements, the company made some questionable investment choices. Active Super was discovered to have invested in gambling-related companies like sports betting operators Tabcorp and PointsBet, and casino firm SkyCity Entertainment.
A glance at their own excluded list reveals their caution about industries presenting "too great a risk to the environment and community." But alas, the fund's stubbornness prevailed, as they held these positions for about two and a half years, offering a host of contrived arguments in their defense.
Justice O'Callaghan expressed his disappointment, stating that Active Super's defense was nothing more than a veil to hide their reckless investment choices.
ASIC Deputy Chair, Sarah Court, insisted that the hefty penalty sends a strong message to other investment companies in the same league—ensuring they meet their lofty promises about ethical investing.
Behind the Scenes of Ethical Investing
Ethical superannuation investment funds in Australia have established clear policies, outlining their investment principles and exclusions, and maintain strong governance structures. These structures, often overseen by external bodies, ensure that investment decisions align with the stated policies.
Internal controls and regular monitoring systems are in place to track investments and ensure they adhere to the fund's ethical criteria. External audits help verify compliance and identify deviations from stated policies.
Transparent disclosure documents and regular reporting keep investors informed about the fund's investment approach and any changes to it. These practices help maintain accountability and reaffirm the fund's commitment to ethical investing.
Although these mechanisms help prevent greenwashing and other compliance issues in the sector, cases like Active Super serve as a stark reminder of the importance of adhering to stated policies. Regulatory bodies like ASIC and APRA enforce compliance with regulations related to disclosure and greenwashing. ASIC has stepped up its enforcement actions against non-compliant funds, imposing significant fines as a deterrent and encouragement for adherence.
Furthermore, ethical funds often engage with their investors and stakeholders to understand and align with their ethical expectations, ensuring investments are consistent with both the fund's policies and stakeholder values. This cohesion instills trust and confidence in the ethical investment landscape, fostering a culture of transparency and honesty.
- Despite its commitment to ethical investing, Active Super has been penalized AU$10.5 million for investing in gambling-related companies like Tabcorp, PointsBet, and SkyCity Entertainment.
- Ethical superannuation investment funds in Australia have established clear policies and maintain strong governance structures to ensure investments align with stated policies.
- Regular monitoring systems, internal controls, external audits, transparent disclosure documents, and regular reporting help prevent compliance issues in the ethical investment sector.
- Cases like Active Super serve as a reminder of the importance of adhering to stated policies to maintain accountability and reaffirm the fund's commitment to ethical investing.
- Engaging with investors and stakeholders helps ethical funds understand and align with their ethical expectations, ensuring investments are consistent with both the fund's policies and stakeholder values.
- Regulatory bodies like ASIC and APRA enforce compliance with regulations related to disclosure and greenwashing, taking steps to prevent non-compliance through fines and increased enforcement actions.
- Investing responsibly in gambling activities, such as casino-and-gambling, casino-games like slots and poker, and responsible gambling practices, is essential for a sustainable and ethical personal-finance strategy in wealth-management and finance sectors.
