Judgment reveals Fiducian's greenwashing brush-off: 'ESG is still a fad'

Fiducian Investment Management Services (FIMS) executive chair Conrad Burge shrugged off greenwashing concerns raised by a member of the team in 2021, replying that "ESG is still fad that will in time implode from its own irrationalities".

The Diversified Social Aspirations Fund (DSAF) was established by FIMS in 2015 in response to demand for an "ethical" or "socially responsible" option for investors. It was closed in 2024.

ASIC commenced civil proceedings against FIMS in 2025 for misleading the public between October 2019 and May 2024 and holding investments in companies that receive revenue from fossil fuels. Earlier in the year, FIMS admitted that it failed to discharge its duties as a responsible entity and agreed to pay $7.3 million penalty.

An investment team member sent an email to FIMS board and the head of investments on 5 October 2021 stating: "The top three issues that ESG conscious investors are searching for are not excluded from the Social Aspirations Fund, with the most significant included sector being fossil fuels. The fund currently includes holdings in Woodside, Oil Search and Shell."

To maintain relevance and appeal to investors, the team member recommended exclusion of fossil fuels from the fund. They also suggested modifying an existing mandate or alternatively appointing a new manager.

To this Burge responded: "[o]ur total exposure to ESG funds is less than 0.3% of total funds under management and as such we should not be spending too much in terms of time or resources on this small sub-sector of the market. In my view ESG is still a fad that will in time implode from its own irrationalities."

There were no amendments made to the fund prior to it being closed permanently on 30 May 2024.

Concerns were also raised by Fiducian Financial Planners on the investments made by the fund and alignment to the ethical investment objectives.

"The Fid Div Social Aspirations fund has BHP and RIO in the top 10 holdings, so it's a tough sell for us when people want ethical funds that don't have exposure to fossil fuels," one Fiducian Financial Planner sent an email in February 2020.

Another email sent by a Fiducian Financial Planner in August 2020 stated: "This client is in the market for pre-retirement advice and has around $1.2 million to invest. However, we would need to be able to offer them a broader range of products than the Fiducian Social Aspirations Fund (stupid bloody name) which is potentially the least 'green' investment product in the sustainable market at present."

In June 2020, FIMS introduced a "Drill Down Function" on the Fiducian Group website, which enabled investors to view the shares or companies held by mandates.

In January 2021, a Fiducian Financial Planner sent an email stating: "I have no confidence in the Fiducian diversified social aspirations fund being 'fit for purpose' and there is nowhere to hide now, with the drilldown looking like this: [Screenshot showing holdings in various entities, including BHP Group, Woodside Petroleum, Rio Tinto and Orica]."

"I have raised this via planner council several times to no avail, but I can't in good conscience recommend the DSA fund as an ethical investment...Is there any way we can add a 'real' ethical fund to her portfolio like, for example, Australian Ethical w/s Diversified, which a few of my FIS clients hold?" the planner added.

Another Fiducian Financial Planner in an email sent in February 2021 said: "The composition of this fund puts us in a compromised position...I feel extremely uncomfortable in even offering it to clients."

In October 2021, Fiducian Group executive chair Indy Singh as member of the FIMS board and investment committee responded to the email concerns raised by the investment team member, stating "there is no need to promote the topic unless we receive planner pressure."

ASIC chair Sarah Court said investors should be able to trust sustainability-related claims made by investment managers.

"More Australians are seeking investments that align with their ethical, environmental and social values. Those investors are entitled to accurate information about where their money is invested," Court said.

"This case is a reminder that ESG claims must be backed by robust systems, oversight and governance. Fund managers and responsible entities must comply with their duties and they cannot make sustainability claims that are not supported in practice."