Within days of merging with Vision Super, the $14.7 billion profit-to-member superannuation fund Active Super has been fined $10.5 million for greenwashing misconduct, including misleading investors over filters in gambling, coal mining, oil tar sands, and Russian investments following the 2022 invasion of Ukraine.

The fine follows a guilty verdict for Active Super and its trustee LGSS Pty Limited in June last year in a case brought by the corporate regulator, which has also yielded successful fines against global funds manager Vanguard and super fund Mercer of $12.9 million and $11.3 million respectively.

The June decision found that Active Super contravened the law when it invested in various securities that it had claimed were eliminated or restricted by its environmental, social and governance (ESG) investment screens.

Contrary to its representations, Active Super held direct and indirect investments in companies such as casino group SkyCity Entertainment Group Ltd (ASX: SKC), Russian energy group Gazprom PJSC, oil tar sands multinational Shell Plc and miner Whitehaven Coal (ASX: WHC).

"This is a significant penalty that sends a strong message to companies making sustainable investment claims that those claims need to reflect the true position," says Australian Securities and Investments Commission (ASIC) Deputy Chair Sarah Court.

"This case demonstrates ASIC’s commitment to taking on misleading marketing and greenwashing claims made by companies promoting financial services. It is our third greenwashing court outcome, and we will continue to keep greenwashing in our sights."

Justice O’Callaghan said that Active Super's misconduct meant investors lost the opportunity to invest in accordance with their investment values.

"It was not disputed that LGSS’s contraventions were serious," he said.

"LGSS benefitted from its misleading conduct by misrepresenting the “ethical” nature of a significant part of its investments, which on any view enhanced its ability to attract investors to the Active Super fund and enhanced its reputation as a provider of investment funds with ESG characteristics."

He emphasised the contravening conduct continued over an "extensive period of time" of approximately two-and-a-half years, and the likely causes of it were never explained.

Justice O'Callaghan also noted that the misconduct concerned substantial investments, was likely to have led to investors losing confidence in ESG programs.

"The failure by LGSS to have in place properly functioning systems and processes designed to ensure that its representations were not false or misleading was the responsibility of senior management," he added.

"Further, when confronted with the allegations by ASIC, LGSS ran a host of contrived arguments in its defence at trial."

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