Retro woman wearing hat and smoking cigarette. 1930s classic portrait.

The Australian division of fund giant Vanguard has been sanctioned for alleged greenwashing involving misstatements about certain funds’ ethical credentials.

The Australian Securities and Investments Commission (ASIC) issued three infringement notices to Vanguard Investments Australia Ltd. alleging that the product disclosure for the Vanguard International Shares Select Exclusions index funds may have misled investors by overstating the scope of the funds screening against tobacco sales.

Specifically, the ASIC alleged that the funds claimed to exclude investments in tobacco — but the underlying index only screened out manufacturers of tobacco products, and didn’t screen out companies involved with their sale.

“Greenwashing is not limited to environmental claims but extends to misleading ethical propositions. Entities which seek to promote ethical investing must ensure their statements are accurate and able to be substantiated,” ASIC deputy chair Sarah Court said in a release.

“Investors can feel strongly about not investing in tobacco production, manufacturing and sales, and where tobacco-exclusion investments are promoted, the entity making those claims must be able to substantiate the full exclusion of those investments,” she added.

The ASIC stressed that enforcement action against alleged greenwashing is a priority for the regulator.

Vanguard paid the monetary sanctions ordered by the ASIC, which the regulator noted is not an admission of guilt or liability.