Fiducian’s $7.3 Million Penalty Turns Greenwashing Into a Governance Problem for Fund Boards

ASIC’s first three greenwashing penalties were about the words in marketing materials. Its fourth is about what happens behind them. In a judgment delivered on 11 August 2026, the Supreme Court of New South Wales found that Fiducian Investment Management Services Limited (FIMS) breached its duty of care and diligence as a responsible entity and made statements liable to mislead the public about an ethical investment fund. The Court ordered a $7.3 million penalty.

ASIC described it as the first greenwashing-related civil penalty outcome based on a responsible entity’s failure to act with care and diligence, and the first against a managed fund operator for failures in governance, compliance and oversight of ESG claims.

What went wrong

FIMS, a wholly owned subsidiary of ASX-listed Fiducian Group, was the responsible entity of the Diversified Social Aspirations Fund. The fund opened in 2015 to meet client demand for a “socially responsible” or “ethical” option, and closed in 2024.

The fund’s product disclosure statement, issued six times between October 2019 and May 2024, said it would invest in companies “that aim to be positive for society and for the environment and aim to avoid investments in harmful activities”. It also listed industries the fund would avoid and said FIMS would routinely monitor the portfolio.

In practice, the fund invested entirely through several underlying funds which, during that period, held companies that derived revenue from fossil fuels, among other activities. The Court found FIMS had no reasonable grounds for its ESG statements. It also found FIMS failed to monitor the underlying investments against those statements, failed to review the underlying funds’ strategies, failed to change its investments, and failed to amend the stated objectives to match what the fund actually held. ASIC said investor concerns about the fund’s holdings had been raised from at least 2019.

FIMS admitted the contraventions. The Court accepted that retail investors were denied an informed choice between this fund and other ESG funds, and that the conduct eroded trust in statements made by responsible entities.

How it fits ASIC’s greenwashing record

The case follows three Federal Court penalties: $11.3 million against Mercer Superannuation, $12.9 million against Vanguard Investments Australia and $10.5 million against Active Super. Together with Fiducian, ASIC’s greenwashing penalties now exceed $40 million.

The earlier cases mainly concerned what was said: exclusions that did not hold and screens that were not applied as described. Fiducian adds a second line of attack. A responsible entity that makes a sustainability promise must have the systems to keep it, and failing to supervise underlying managers can itself breach the statutory duty of care and diligence.

“This case is a reminder that ESG claims must be backed by robust systems, oversight and governance,” ASIC Chair Sarah Court said when announcing the penalty.

The fund-of-funds problem

The structure in this case is common across Australian wealth management. Many products marketed on ethical or sustainable credentials invest through external managers or platforms. The judgment makes clear that outsourcing the portfolio does not outsource responsibility for the label. If the product disclosure statement promises exclusions, the responsible entity needs a way to verify them at the look-through level, and a process to act when they are breached.

Implications beyond funds management

The lesson extends to corporate Australia. With mandatory climate reporting now covering a growing number of companies, directors are signing off on more climate-related statements than ever. Fiducian shows that regulators will ask not only whether a statement was literally true, but whether the entity had reasonable grounds for it and the governance to keep it true over time.

What boards should check

• Inventory every sustainability claim in disclosure documents, websites, fact sheets and investor presentations.
• Test look-through compliance where products invest via other funds or mandates, and document the results.
• Set escalation triggers so investor complaints or breaches of stated exclusions reach the board or compliance committee quickly.
• Update or withdraw claims promptly when holdings and strategy change. ASIC’s Information Sheet 271 sets out its expectations on avoiding greenwashing.

This article is general information only and is not legal advice. Readers should seek advice specific to their circumstances.