Greenwashing continues to rear its head in finance. Australia has been a leader in financial greenwashing enforcement, and this case follows a similar pattern to previous greenwashing cases. Fiducian Investment Management Services Limited (FIMS) ran an ESG fund that purportedly “aim[ed] to be positive for society and for the environment and aim[ed] to avoid investments in harmful activities.” However, upon investigation, it was found that the FIMS ESG fund really just invested in numerous underlying funds. These funds used different ESG screening criteria, and some included investments in fossil fuel companies. Ultimately, the Australian courts fined the ESG fund $7.3 for misrepresentations. The Australian Securities & Investments Commission (ASIC) writes of the case:
“The Supreme Court of New South Wales found on 11 August 2026, that FIMS had failed to act in accordance with its duty of care and diligence as the responsible entity of the Diversified Social Aspirations Fund (Fund). The Court also found that FIMS made statements that were liable to mislead the public about the ‘ethical’ or ‘socially responsible’ investment objectives of the Fund (ESG Statements) and that it would monitor the Fund to ensure its investments were consistent with the ESG Statements….
The Court found that FIMS did not have reasonable grounds to make the ESG Statements.
The Court also found governance and oversight failures on FIMS’s part, including that it failed to:
- adequately monitor the Fund’s underlying investments for alignment with the ESG Statements
- review the investment strategies of the Underlying Funds
- change its underlying investments, or
- cause the Fund’s stated investment objectives to be amended to align with its actual investments.”
Australian courts fined Vanguard Australia $12.4 million for similar misrepresentations in 2024. The latest action shows that greenwashing liability cannot be offloaded onto a third party simply because they manage the underlying fund. Financial services firms are responsible for ensuring the claims they make to their clients are truthful. That means conducting due diligence inquiries and reading the underlying fund methodologies.
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