On 15 September 2021, ASIC issued an update after intervening the initial public offering of an energy company looking to clarify ‘net zero’ greenhouse gas emissions statements.
ASIC explains that there needs to be reasonable grounds for the forward-looking ‘net zero’ statements and in the absence thereof, the disclosure may be deemed misleading.
In this instance, the energy company was ordered to remove all ‘net zero’ statements that suggested short-term implications. They are also required to disclose their vision to operate in a ‘net zero’ manner, explain how they propose to achieve this, and highlight any risks or uncertainties that may hinder achieving this vision.
An article by UK publisher Responsible Investor highlights similar instances where the scrutiny of companies in Australia and abroad of their ‘net zero’ claims has resulted in the launch of investigations on the grounds of misleading investors.
We know that elsewhere ASIC is investigating greenwashing and that such examples of potentially misleading reporting are high on the regulator’s agenda.
Based on ASIC’s warning that they will continue to monitor ‘net zero’ statements in the market, including fundraising documents, and will take regulatory action where needed – it is not a question of if but rather of when Australia will follow in the footsteps of Europe in the implementation of a regulatory framework around mandatory ESG reporting.
