What Is Greenwashing and How Does ASIC Define It?
Greenwashing has moved from a reputational concern to a legal one. In Australia, regulators have pursued civil penalty proceedings, issued infringement notices and obtained Federal Court judgements with penalties in the tens of millions of dollars. For any organisation making environmental or sustainability claims in a product disclosure statement, a sustainability report, an investor presentation or a marketing campaign, understanding what greenwashing is, how it is defined, and where the risk most commonly arises is now a necessary skill.
How ASIC Defines Greenwashing
The Australian Securities and Investments Commission (ASIC) defines greenwashing as “the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical.” This definition is specific to the financial services context such as investment products, superannuation funds, exchange-traded funds (ETFs) and related financial instruments.
There is no standalone greenwashing law in Australia. Instead, conduct is captured by existing misleading and deceptive conduct-related provisions across several legislative frameworks. Section 18 of the Australian Consumer Law (ACL) prohibits conduct in trade or commerce that is misleading or deceptive, or likely to mislead or deceive. Section 29 of the ACL prohibits false or misleading representations about the characteristics, standard or quality of goods or services. Section 12DA of the ASIC Act 2001 mirrors the ACL for financial products and services, and this is the provision ASIC has relied on in its proceedings against superannuation funds, ETFs and listed companies for misleading Environmental, Social and Governance (ESG) claims. Listed entities also carry continuous disclosure obligations under the Corporations Act 2001 and ASX Listing Rule 3.1.
The Australian Competition and Consumer Commission (ACCC) runs a parallel enforcement program covering consumer-facing goods and services, with a broader definition that captures any claim making a product “seem better or less harmful for the environment than it really is.”
What the Enforcement Record Shows
Since declaring greenwashing an enforcement priority in 2022, ASIC has conducted 47 regulatory interventions across a 15-month period and has won three Federal Court civil penalty cases.
In ASIC v Mercer Superannuation (Australia) Ltd (2024), Mercer was ordered to pay A$11.3 million after admitting it made false and misleading statements about its “Sustainable Plus” investment options, which were found to include investments in companies involved in fossil fuels, gambling and alcohol which is contrary to what the product’s sustainability claims implied.
In ASIC v Vanguard Investments Australia Ltd (2024), Vanguard was ordered to pay A$12.9 million after the Federal Court found that 46% of securities in its ethically conscious fund had not been screened against the criteria it publicly promoted, representing 74% of the fund’s market value. The Court noted the fund was initially well-intentioned but that Vanguard lacked the internal systems, resourcing and processes to apply the screening consistently.
ASIC also commenced proceedings against Local Government Super (Active Super) for similar conduct. Across these cases, the common themes are inconsistent application of ESG screening criteria, inaccurate disclosures, and internal governance failures — not deliberate deception, but a failure to ensure that public claims were supported by documented operational reality.
The ACCC’s first successful greenwashing case resulted in Clorox Australia being ordered to pay A$8.25 million in 2024, after the Federal Court found its GLAD kitchen and garbage bags were misleadingly represented as containing 50% recycled “ocean plastic,” when the plastic was in fact collected from Indonesian communities not located near the shoreline.
Where the Risk Often Arises
In our experience, the most common source of greenwashing risk is not a deliberate decision to overstate environmental credentials. It is the sustainability team, or the function responsible for ESG data and disclosure, not being involved in the review of communications before they are published.
Marketing materials, investor presentations, website copy and media releases are often drafted by communications or investor relations teams working to tight deadlines and with a natural orientation toward positive framing. When those materials include environmental or sustainability claims that have not been reviewed by the people who understand the underlying data, the risk of a gap between what is claimed and what is substantiated increases significantly. That gap, even when unintentional, is the territory that regulators are actively monitoring.
Word choice is also a meaningful source of risk. Terms like “sustainable,” “green,” “clean,” “responsible,” “ethical,” “net zero” and “carbon neutral” carry different technical meanings to different audiences. A statement that reads as appropriately qualified to an internal legal team may read as an absolute claim to an investor or a member of the public. In the absence of external assurance or audit over sustainability disclosures, the burden of managing that interpretive gap often falls on internal legal and compliance teams, and that burden is growing as mandatory reporting increases the volume and visibility of ESG claims in the market.
ASIC’s Chair Joe Longo stated at the 2024 Responsible Investment Association Australasia (RIAA) Conference that “any entity which is clear, accurate and transparent in its disclosures has nothing to fear.” That is the standard to work toward. It is also, in practice, harder to achieve consistently than it sounds.
Greenwashing, Greenwishing and Greenhushing
Greenwashing is now part of a broader vocabulary of “washing” risks that organisations and investors are increasingly alert to. Two related concepts are particularly relevant in the current Australian context.
Greenwishing refers to making ambitious future climate or sustainability commitments (net zero targets, science-based targets, biodiversity pledges) without a credible plan, budget or governance structure to support them. It is distinct from greenwashing in that the statements may be genuinely intended, but they are not grounded in substantiated action. The ACCC’s 2023 internet sweep of environmental claims found that a significant proportion of claims reviewed raised concerns about vague terminology and future commitments with no supporting plan.
Greenhushing refers to the opposite behaviour, where companies are deliberately withholding or understating ESG information to avoid regulatory or activist scrutiny. As greenwashing enforcement has intensified, some organisations have responded by reducing the specificity of their sustainability communications or withdrawing previously published targets. While this may reduce short-term exposure to greenwashing claims, it creates its own risks: investor relations implications, reputational damage if the withdrawal is noticed, and potential continuous disclosure issues for listed companies.
The Broader “Washing” Landscape
Beyond environmental claims, a broader set of “washing” risks has emerged across social and governance dimensions of ESG. These are increasingly recognised in investment and advisory contexts, even where regulatory frameworks have not yet caught up with the terminology.
Bluewashing refers to organisations overstating their commitment to social responsibility, often through association with the United Nations (UN) Global Compact or similar international frameworks, without substantive operational change behind the claim.
Social-washing is a broader term covering the misrepresentation of social credentials generally, including labour rights, community impact, modern slavery commitments and supply chain human rights standards. As modern slavery reporting obligations expand and supply chain scrutiny increases, this is an area where the gap between disclosure and reality is likely to attract growing attention.
Impact-washing refers to claiming measurable positive social or environmental impact without the methodology, evidence or independent verification to support the claim. It is particularly relevant in the impact investing market, where product labels and fund names can imply a level of measured outcome that is not always present in the underlying investment approach.
Woke-washing describes organisations making high-profile public statements on social justice, diversity or inclusion issues for reputational purposes without corresponding internal policy or cultural change.
Pinkwashing refers to the use of support for LGBTQ+ causes or health campaigns as a marketing device, without genuine organisational commitment to the underlying issues.
The common thread across all of these is the same as with greenwashing: a gap between what is publicly claimed and what is operationally true. As disclosure frameworks become more structured and more subject to assurance, that gap becomes harder to sustain, which is, ultimately, the point of mandatory reporting.
Our View
Greenwashing risk should reduce as mandatory reporting under AASB S2 becomes more established. Structured disclosure requirements, combined with assurance obligations that expand progressively through to 2030, mean that ESG claims made in sustainability reports will increasingly need to be supported by auditable evidence.
The risk that remains is in the communications that sit alongside formal disclosures such as the marketing materials, the investor presentations, the website copy and the media releases that are not always subject to the same rigour. A practical mitigation is also one of the most simple: to ensure that the sustainability team is involved in reviewing any external communication that makes an environmental or social claim before it is published. That one process change addresses the most common source of the problem.
More broadly, as the vocabulary of washing expands beyond the environmental dimension to social and governance claims, organisations would do well to apply the same scrutiny to their social impact claims, modern slavery statements and diversity commitments that they are now beginning to apply to their climate disclosures. The regulatory frameworks for social-washing and impact-washing are less developed than those for greenwashing, but the reputational and investor relations consequences of a credibility gap in those areas is growing.
Sources
- ASIC, Information Sheet 271 (INFO 271) — How to avoid greenwashing when offering or promoting sustainability-related products, updated March 2026, asic.gov.au
- ASIC, Keynote speech by Chair Joe Longo at the RIAA Conference Australia, 2 May 2024, asic.gov.au
- ASIC, Report 791 — ASIC’s greenwashing interventions: 1 July 2022 to 30 September 2023, asic.gov.au
- ASIC v Mercer Superannuation (Australia) Ltd (2024) Federal Court of Australia
- ASIC v Vanguard Investments Australia Ltd (2024) FCA 308
- ACCC v Clorox Australia Pty Ltd (2024) Federal Court of Australia
- Ashurst, Australia’s Greenwashing Regulatory Landscape: ASIC and the ACCC Stay Focused, May 2026, ashurst.com
- Allens, Greenwashing Enforcement Reaches New Heights, August 2025, allens.com.au
- Law Society of Tasmania, Greenwashing, Greenwishing and Greenhushing: Legal Risks, Enforcement Trends and Implications, January 2026, lst.org.au
- Elamine Lawyers, What Is Greenwashing and Why Is It a Problem?, May 2026, elaminelaw.com.au
- Senate Standing Committee on Environment and Communications, Inquiry into Greenwashing, Report, June 2026
Anabranch ESG Advisory provides independent advice on ESG strategy, climate disclosure, and sustainability reporting. The information in this article is general in nature and does not constitute legal or financial advice.
