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Infringement Notices for Greenwashing

Wednesday 11 January 2023


The first infringement notice of the year is related to greenwashing.   
 
Black Mountain  Energy Group  BME, a listed energy company, paid almost $40,000 after receiving the three infringement notices for false and misleading representations to the Australian Stock Exchange (ASX)  for the sustainability-related claims between late 2021 to September of last year. 

While the payments related to infringement notices are an admission of guilt, action against the listed company is in step with the securities and investment the regulator stated enforcement priorities. 

All three infringement notices for the breach the 12 DB 1(A) of the Australian Securities and Investments ACT:


make a false or misleading representation that services are of a particular standard, quality, value or grade;

The energy company founded in 2007,  claimed that their Valhalla Project in Western Australia's Canning Basin was developing an ‘unconventional’ drilling approach for ‘low-impact’, low-risk carbon neutral natural gas.    

In response, the regulator listed why they thought the energy company’s claims were false or misleading:



  • BME had not progressed any substantive or meaningful works regarding how it would attain net-zero carbon emissions and had not allocated funding for such works;
  •  BME had not undertaken any specific modelling of carbon dioxide emissions that were likely to be generated by, or might be expected to arise from, the production of gas from Project Valhalla, which would be required to be offset to achieve carbon neutrality;
  •  BME had not undertaken any substantive modelling of the likely cost involved in offsetting any carbon dioxide emissions from Project Valhalla;
  • BME’s net zero emissions target would only apply if BME was able to progress to production and was not intended to apply in relation to any exploratory or development activities;
  •  BME did not have a credible or feasible plan for an ‘unconventional drilling’ approach or any other approach that would produce carbon neutral natural gas;
  • BME had no credible basis for asserting that the natural gas it produced would be carbon neutral; and
  •  further and accordingly, BME had no reasonable grounds for making the Representations regarding net-zero carbon emissions from Project Valhalla.
 
 
Greenwashing, an enforcement priority
Last year in an official statement accompanying the announcement of the enforcement priorities the conduct regulator said, “ASIC will closely monitor for misleading conduct and claims of greenwashing that cannot be sustained, and take enforcement action where necessary”.

The Information Sheet (INFO271) How to avoid greenwashing when offering or promoting sustainability-related products published last June should help guide the ASIC-regulated entities.