CUBE RegNews:
5^th June

ASIC chair: ESG change is coming – be prepared          

In a recent speech, Joe Longo, chair of the Australian Securities and Investments Commission (ASIC) highlighted the significance of Environmental, Social, and Governance (ESG) considerations in business reporting and the fight against greenwashing. The ASIC chairman stressed that ESG is not just a passing trend but a crucial aspect of fair and efficient markets and confident investment. 

The speech acknowledged the progress made by large Australian companies in engaging with climate-related matters and implementing sustainability reporting. According to a KPMG survey, Australian companies outperform their global peers in recognising climate as a financial risk, reporting against climate-related financial disclosures, and addressing social risks to the business. 

However, the ASIC chairman cautioned against complacency and emphasised the need for rigorous, robust, and comprehensive ESG disclosures. He noted that markets and investors increasingly rely on this information for decision-making, and misleading or deceptive practices are unacceptable. 

The speech also addressed the issue of greenwashing, which has become a priority for ASIC. Greenwashing refers to misleading or exaggerated claims regarding sustainability practices. ASIC has taken enforcement actions against companies found to engage in greenwashing and highlighted four categories of problematic behavior:  

• baseless net zero statements,  
• misleading terms like “carbon neutral” or “green,”  
• overstating sustainability-related investment screens, and 
• using inaccurate or vague labels in sustainability-related funds. 

ASIC’s efforts align with the Australian government’s broader sustainable finance agenda, including mandatory climate disclosures and ESG labeling and taxonomy. The regulator aims to enforce existing legal obligations and prevent greenwashing by promoting trust in sustainable finance-related products, services, and disclosures. 

The speech also recognised the global significance of the ESG space and emphasised ASIC’s engagement at both the domestic and international levels. ASIC is actively involved in initiatives and task forces, collaborating with regulators and stakeholders to stay informed and prepared for the changes unfolding in the financial services sector. 

Concluding, Longo emphasised the need for companies to strengthen governance and disclosure standards, combat greenwashing, and prepare for the evolving ESG landscape. The regulator remains committed to maintaining high standards and ensuring that businesses adapt to forthcoming changes effectively. 

ESSA Bank & Trust to pay $3 million to settle redlining allegations 

ESSA Bank & Trust (ESSA) has reached a settlement with the Justice Department, agreeing to pay more than $3 million to resolve accusations of engaging in lending discrimination through redlining practices in Philadelphia’s majority-Black and Hispanic regions. Redlining is the practice of illegally denying credit services to individuals based on the racial or ethnic makeup of their communities. 

According to the complaint filed in federal court, between 2017 and 2021 ESSA allegedly failed to provide mortgage lending services and neglected the credit needs of the predominantly Black and Hispanic regions in the Philadelphia metropolitan area. 

Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division stated: “Residents of communities of color have been unlawfully denied equal access to credit and shut out of economic opportunities for too long.” She emphasised that redlining perpetuates segregation and widens the racial wealth gap, and that the settlement demonstrates the department’s commitment to holding banks accountable for modern-day redlining and promoting fair lending in communities of colour.