An energy company has become the first firm in Australia to be fined for ‘greenwashing’ by the country’s corporate watchdog.
The Australian Securities and Investment Commission (ASIC) fined Tlou Energy $53,280 (€34,260) for making “factually incorrect” statements about its environmental credentials.
The company - which develops power projects in sub-Saharan Africa - claimed that the electricity it produced would be carbon neutral and that its gas projects would be "low emissions".
Tlou also insisted that it had environmental approval and the capability to generate certain quantities of electricity from solar power.
However, the corporate regulator has cast serious doubt on these claims.
“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, Tlou Energy said it did not break any rules but still agreed to pay the fine.
What is Greenwashing and how are regulators cracking down on it?
'Greenwashing' is a practice of misrepresenting the extent to which an investment or a financial product is environmentally-friendly and sustainable.
This is the first time ASIC has cracked down on the practice - but the watchdog’s deputy chair Sarah Court hinted that more penalties are on the way.
“ASIC is currently investigating a number of listed entities, super funds and managed funds in relation to their green credentials claims,” she said.
“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.”
Across the world, regulators have been cracking down on dubious sustainability claims from companies.
In Germany, for example, a consumer group is suing Deutsche Bank for allegedly misrepresenting an investment fund's green credentials in marketing materials.