Australia’s corporate regulator has secured another significant victory in its campaign against greenwashing, with the Australian Securities and Investments Commission winning a A$7.3 million civil penalty against Fiducian Investment Management Services Limited for misleading investors about the sustainability credentials of one of its managed funds.
The Supreme Court of New South Wales ordered the penalty after finding that Fiducian Investment Management Services (FIMS), the responsible entity of the Diversified Social Aspirations Fund, breached its duty to act with care and diligence and made statements that were liable to mislead the public about the fund’s ethical investment objectives. The decision marks ASIC‘s fourth greenwashing civil penalty and the first involving a managed fund operator’s governance and oversight obligations, reinforcing the regulator’s increasingly aggressive approach to policing sustainability claims across Australia’s financial services industry.
The judgment also extends a regulatory trend FinanceFeeds has been following as supervisors worldwide move beyond disclosure failures and begin holding financial firms accountable for the systems supporting environmental, social and governance claims. Earlier this week, FinanceFeeds reported that ASIC’s industry-wide review of 52 CFD providers had already resulted in the suspension of one broker’s licence, demonstrating that the regulator is increasingly relying on thematic reviews and governance examinations rather than responding only to individual complaints.
Fund Promised Ethical Investing While Holding Fossil Fuel Exposure
The case centred on the Diversified Social Aspirations Fund, which Fiducian established in 2015 to meet growing investor demand for socially responsible investment products. Between October 2019 and May 2024, the fund invested exclusively through several underlying investment funds. Those underlying funds, however, held investments in companies that generated revenue from fossil fuels and other activities that investors had been told the portfolio would avoid.
Across six Product Disclosure Statements issued during that period, FIMS stated that the fund would invest in companies that aimed to be positive for society and the environment while avoiding harmful activities. The disclosure documents also listed industries the fund would avoid and represented that Fiducian would routinely monitor the portfolio to ensure investments remained consistent with those objectives.
The Court concluded those statements were not supported by reasonable grounds.
Rather than being an isolated disclosure issue, the judgment identified failures throughout the investment governance process. According to the Court, FIMS failed to adequately monitor the underlying funds, review their investment strategies, change investments that conflicted with the stated ESG objectives or amend the fund’s own objectives to reflect what investors were actually buying.
Perhaps most significantly, investor concerns about the portfolio’s holdings had been raised as early as 2019, yet the ESG statements remained unchanged for years despite those warnings.
Governance Failures, Not Marketing Alone
The Fiducian judgment highlights how regulators’ understanding of greenwashing has evolved. Early enforcement actions often focused on promotional material that overstated environmental credentials. This case goes considerably further by examining the governance processes behind those claims.
The Court found that Fiducian’s failures extended well beyond the wording of its marketing documents. As the responsible entity of the managed fund, the company had statutory duties to supervise investments, oversee portfolio construction and ensure the fund continued operating consistently with the promises made to investors. Those governance responsibilities, the Court found, were not discharged.
That distinction matters because it raises the compliance standard for fund managers. ESG claims can no longer be treated primarily as marketing statements requiring legal review before publication. Instead, regulators increasingly expect firms to maintain documented investment processes, ongoing monitoring systems and governance frameworks capable of demonstrating that sustainability claims remain accurate throughout the life of an investment product.
ASIC has spent the past several years reinforcing that message through guidance, enforcement actions and industry reviews. The regulator’s Information Sheet 271 sets out expectations for responsible entities and superannuation trustees offering sustainability-related products, while its Report 791 summarises the regulator’s broader greenwashing intervention program.
The wider enforcement strategy mirrors developments in other areas of ASIC supervision. ASIC completed 150 administrative enforcement outcomes during the 2025-26 financial year, with Chair Sarah Court repeatedly emphasizing governance, compliance and board accountability rather than isolated misconduct.
ASIC Continues Building a Greenwashing Penalty Record
The Fiducian decision adds another major penalty to ASIC’s growing record against financial institutions accused of misleading sustainability claims.
Before this case, the regulator secured civil penalties of A$11.3 million against Mercer Superannuation, A$12.9 million against Vanguard Investments Australia and A$10.5 million against Active Super. Together with the latest A$7.3 million judgment, those cases establish a consistent enforcement pattern in which Australian courts have accepted ASIC’s arguments that inaccurate ESG representations can undermine both investor decision-making and confidence in financial markets.
Unlike several previous cases, however, the Fiducian proceeding focused directly on the obligations of a responsible entity operating a managed investment scheme. That makes it an important precedent for Australia’s investment management industry because it confirms that ESG enforcement extends beyond disclosure documents to the operational governance of investment funds themselves.
FIMS admitted during the proceedings that it failed to discharge its statutory duties as responsible entity and contravened provisions prohibiting misleading representations.
Investors Were Denied an Informed Choice
In accepting ASIC’s submissions, the Supreme Court found that retail investors were denied the opportunity to make an informed choice between the Diversified Social Aspirations Fund and competing ESG investment products available in the market. The Court further concluded that Fiducian’s conduct eroded confidence in Australia’s financial system and reduced trust in statements made by responsible entities.
ASIC Chair Sarah Court said the decision reinforces that investors should be able to rely on sustainability claims made by investment managers.
“More Australians are seeking investments that align with their ethical, environmental and social values. Those investors are entitled to accurate information about where their money is invested.”
“This case is a reminder that ESG claims must be backed by robust systems, oversight and governance. Fund managers and responsible entities must comply with their duties and they cannot make sustainability claims that are not supported in practice.”
The ruling is likely to resonate beyond Australia. Regulators in Europe, the United Kingdom and North America have all intensified scrutiny of ESG-labelled investment products as demand for sustainable investing has grown. Increasingly, enforcement is focusing less on whether firms have published sustainability policies and more on whether they can demonstrate, through governance and ongoing oversight, that investment decisions consistently match those public commitments.
For investment managers, the Fiducian judgment reinforces that ESG compliance is no longer primarily a disclosure exercise. It has become a governance obligation that extends from investment selection through portfolio monitoring and board oversight. As regulators continue expanding their scrutiny of sustainability claims, firms that cannot demonstrate those controls are likely to face the same question the Court ultimately answered in this case: whether their ESG promises were supported by what they actually invested in.