Key Points
- First it was Tlou Energy in October, then ASIC stung Vanguard last month
- Now, at the start of January, ASIC has fined energy microcap Black Mountain over tenuous net zero carbon claims
- While the fines are small (for now), the watchdog appears set on staying true to an initiative to clamp down on greenwashing
Market watchdog Australian Securities & Investment Commission (ASIC) on Thursday fined microcap Black Mountain Energy (ASX:BME) $40,000, claiming it misadvertised its efforts to decarbonise.
ASIC took issue with several announcements released by the company between 2021 and 2022, putting it to Black Mountain the explorer had no “credible” basis to advertise its proposed natural gas play as “net zero.”
Worth noting is that “net zero” is a term without legal definition. If ASIC carries on its greenwashing enforcement sting, a case in Australia could potentially be the first to define it.
In the crosshairs
Black Mountain announced its recognition of the infringement notice to the market, also highlighting that by paying the penalty it frees itself from legal proceedings.
Black Mountain shares were down -5.7% to 3.3c heading into lunchtime trade, though it’s worth noting energy stocks broadly are taking a battering, so ASIC alone is unlikely to be the sole catalyst.
Nor is a $40,000 fine likely to be considered as overly onerous.
While Black Mountain is a microcap with $1.8m total shares on issue, it had $6m in cash at the end of the September quarter.
Third scalp in just over three months
But for those playing at home, the news reflects a growing trend coming from ASIC’s enforcement team.
It started with Tlou Energy (ASX:TOU) back in October.
In a similar vein, ASIC gifted Tlou its first ever greenwashing infringement after it concluded Tlou Energy had misadvertised claims related to the emissions profile of its proposed project portfolio.
Two months later, in December, the watchdog stung Vanguard with an infringement for misadvertising the ethical stance of an ESG fund product.
Ultimately, Vanguard got in hot water for not disclosing that fund invested in retailers selling tobacco.
At the time, ASIC deputy chief Sarah Court noted “greenwashing” extends to social and governance issues too, not just environmental.
“[Entities] making those claims must be able to substantiate them,” Court said at the time.
Just a $40,000 fine, for now
Now, at the start of January 2023, it has claimed the third scalp from Black Mountain.
Regulatory action against companies, especially environmental, is typically seen as part of the course, at least for more risk-on investors and operators.
The laws are sometimes referred to as blunt weapons, given that it can be cheaper to pay the fine for illegally destroying native bush than it is to commission an environmental study.
The two big questions on investors’ minds should be how serious is ASIC going to be about keeping this up and, if the greenwashing crackdown is here to stay, for how long will it go without raising the penalty?