Australia’s corporate regulator, the Australian Securities & Investments Commission (ASIC), is suing Fiducian Investment Management Services (FIMS), alleging that one of its ethical funds included mining and fossil fuel companies – despite being marketed as socially responsible.[1] As the case unfolds, it’s a timely reminder that misleading fund labels – intentional or not – can carry serious legal consequences. But encouragingly for investors, it demonstrates that ASIC is raising the bar on how funds are marketed and managed, sending a strong signal that fund managers will face closer scrutiny to ensure their practices match their ethical claims.
It’s no longer enough to slap on an ‘ESG’ or ‘social aspirations’ label and hope investors won’t dig deeper. Fund managers must ensure due diligence, even when outsourcing investment decisions. If a fund claims to avoid harmful industries or promote social good, it must be backed by real oversight, transparency, and accountability.
But it can also help when investors do some research when they’re choosing a fund …
How investors can evaluate ethical funds
Here are some steps to help you evaluate a fund:
- Read the Product Disclosure Statement (PDS) [2] – It should detail the fund’s ESG criteria and exclusions.
- Ask questions: Contact the fund manager and ask how they define ‘ethical’ and what checks they use.
- Look for third-party ratings: Independent ESG ratings (e.g. Morningstar Sustainability Ratings) add credibility.
- Check stewardship practices: Does the fund vote on shareholder resolutions or engage with companies on ESG issues?
It’s important to note here that, ethical investing doesn’t have to be perfect to be powerful. Where people put their money does make a difference.
So investors should aim for progress over perfection, remembering that ESG funds can still be a meaningful – and profitable – way to align money with values.
If you’d like help aligning your money with your values, call me at Align Financial on (02) 9913 99915.
[1] Australian Securities and Investment Commission vs Fiducian Investment Management Services Limited, Statement of Claim document filed with the Supreme Court of New South Wales, 2 October 2025, https://download.asic.gov.au/media/hetjwppb/25-225mr-statement-of-claim-asic-v-fiducian.pdf
[2] The Corporations Act 2001 – Sect 1012C sets out the requirements to provide a Product Disclosure Statement as it relates to the sale of financial products. https://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1012c.html