Australian insurance providers have been urged to stay vigilant to “greenwashing” as companies globally face growing pressure from activist shareholders and consumers to adopt more pro-climate policies. 
 
The Australian Competition and Consumer Commission and the Australian Securities and Investments Commission (ASIC) have said they are cracking down on greenwashing. 
 
ASIC defines greenwashing as the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical. 
 
“With the increasing focus on ESG in the insurance industry, insurers may be vulnerable to greenwashing, and need to be particularly mindful in respect of pledges and representations made in respect of climate change policies, solutions and products,” Commercial Insurance Practice Partner Mark Doepel told insuranceNEWS.com.au. 
 
“This need for caution is further exacerbated by increased regulatory scrutiny and prosecutions, the Australian Government’s stated intention of plans to introduce mandatory sustainability and ESG reporting requirements for large Australian entities and the global rise of activist litigation.” 
 
Last week ASIC released a short report detailing the 35 interventions it has made in response to its greenwashing surveillance activities from last July to March this year. In one of the interventions the corporate watchdog lodged civil penalty proceedings against Mercer Superannuation, alleging greenwashing conduct. 
 
Mr Doepel says given the strong focus on environment, social and governance (ESG) challenges within the insurance industry, major domestic insurers and the broader industry appear to be on the front foot in dealing with these challenges. 
 
He notes the Insurance Council of Australia has worked with Boston Consulting Group to launch the “Towards a Net Zero and Resilient Future” roadmap for the industry last year. The roadmap outlines the way insurers can achieve net zero emissions for their operations by 2030 and across the entirety of insurers’ activities by 2050. 
 
He says major domestic insurers have also for several years been implementing sustainable investment programs, engaged in partnerships with government and industry to develop a more climate resilient nation and have held themselves accountable to self-imposed climate change policies and targets. 
 
His comments come as Global Insurance Law Connect (GILC) – a network of boutique law firms that includes Sparke Helmore – released its annual Risk Radar report. 
 
The report focused solely on the impact of ESG on the insurance industry globally. 
 
Click here for the report.