Vanguard Investments Australia has been fined a record A$12.9 million (approximately $8.9 million USD) by an Australian federal court for misleading claims regarding the ethical standards of its Vanguard Ethically Conscious Global Aggregate Bond Index Fund. The fund, launched in 2018, was marketed as excluding investments in sectors such as fossil fuels, alcohol, and tobacco. However, it was revealed that a significant portion of the bond issuers had not undergone the promised ESG (Environmental, Social, and Governance) screening.
The Australian Securities & Investments Commission (ASIC) found that Vanguard’s fund included issuers such as Chevron Phillips Chemical and Abu Dhabi Crude Oil Pipeline, which conflicted with the ethical claims made to investors. Despite Vanguard identifying discrepancies in 2021, legal action was taken by ASIC in 2023, culminating in the court’s decision.
Justice O’Bryan emphasized the seriousness of Vanguard’s misrepresentations, stating that 74% of the securities in the fund had not been screened against the claimed ESG criteria. The fine comes as part of ASIC’s broader crackdown on greenwashing, targeting misleading sustainability claims in the financial sector.
ASIC Deputy Chair Sarah Court praised the ruling, stating, “This is an important decision and the penalty imposed is the highest yet for greenwashing conduct.”