The Australian Stock Exchange is cracking down on companies faking green credentials to pump up their share price.

ASX compliance chief Janine Ryan has warned companies against using the market’s disclosure system to make unnecessary or misleading statements that overstate climate and emission reduction achievements.

‘Greenwashing’ is a focus area for the ASX, in a similar way to the Australian Securities and Investments Commission, Ms Ryan told a Governance Institute of Australia forum on Tuesday.

The market operator’s warning comes after Australia’s corporate watchdog last year warned funds against trying to snare investors by over-representing environmentally friendly, sustainable or ethical efforts.

“The rules are the same, whatever disclosure you’re making,” she said.

“There’s not a separate rule framework applies for greenwashing.”

Rather, companies should always ask themselves if the statement about any green initiative is materially price sensitive and complete, and whether they have a “reasonable basis” for forward-looking green statements, she said.

“What’s your basis for saying you’re going to get to net zero in a particular period of time?”

It is also important to be wary of what is being said off the platform, because if you are not careful and the share price moves significantly, then trading could be suspended while the matter is corrected, she said.

The market operator is also wary of the influx of exchange traded funds with an environmental, social and governance flavour.

“Again, our focus in that area is that they are true to label,” she said.

“What’s the investment mandate, are they actually applying a genuinely green strategy?”

Marion Rae
(Australian Associated Press)