Mandatory: Include the CSF advertising risk warning
Every piece of advertising during the Birchal campaigns (EOI & CSF offer) must include the below exact CSF advertising risk warning:
“Always consider the general CSF risk warning and offer document before investing”
From the moment you start talking about your Birchal campaign, you must include the CSF advertising risk warning. This includes your warm up emails, pitch video, all ads including static image ads (include the risk warning on the image as well as any ad copy), every Linkedin post, SMS, email etc. When in doubt, add the risk warning.
What is the CSF advertising risk warning?
The CSF risk warning is a statement that tells investors to consider the general risk warning & the CSF offer document before making a decision to invest.
Failure to include the CSF risk warning is a strict liability offence. Your company and officers could be punishable by a maximum penalty of 30 penalty units (currently approx $6,660) for each offence (i.e. each email, each SMS, each impression). In digital advertising, it is important to include the CSF risk warning in both the static image AND the ad copy - this is because images & copy can display in different combinations.See examples, any questions please ask your Campaign Manager.
Advertising: the law & guidance
Advertising your CSF Offer falls under the laws & regulations governing the CSF regime and advertising offers of securities to the public.
The key ASIC Regulatory Guides are:
- ASIC Regulatory Guide 261: Crowd-sourced funding: Guide for companies
- ASIC Regulatory Guide 234: Advertising financial products and services: ASIC's good practice guidance
- ASIC Regulatory Guide 170: Prospective financial information
- Any other relevant information
You will also need to continue to comply with all relevant laws, regulations & codes of practice relating to advertising in your particular industry. For example:
Guidance & best practice
These tips apply to all advertising material (pitch video, social media posts, email) as well as the content in your CSF offer document.
Do:
- Focus on your business & your story - storytelling is a critical component of capital raising. All marketing is an opportunity to reinforce your story
- Focus on your achievements to date and your mission / impact
- Remember this is a regulated offer of securities - be factual and avoid “over-selling”
- Display the CSF advertising risk warning: Always consider the general CSF risk warning and offer document before investing
- Make accurate, factual statements that are balanced and a represent the company’s business
- Give balanced information to further an investor’s understanding of the business and the CSF offer
- Any reference to past performance should include a warning that past performance is not indicative of future performance
- Be really mindful of “greenwashing” & “greenhushing” - see below for more information
- Keep it simple. Make sure advertisements are capable of being clearly understood by the intended audience
- Keep graphs and diagrams clear, unambiguous and not overly complicated
- Include a disclaimer if you are incorporating conceptual images or renders. Eg: Conceptual image for illustrative purposes only
- Double check if any additional laws applies to advertising in your industry
Do not:
- Your marketing must not be speculative or misleading or create a misleading impression
- Do not create unrealistic expectations about the business or the CSF offer
- Do not include any financial forecasts or other forward-looking statements in the video - examples of this are revenue forecasts, run rates, financial targets, projections (see RG170 for more information)
- Do not talk about investor returns, guarantees of success or the CSF offer being a low risk investment (see RG170 for more information)
- Do not include a valuation of the business as this may change throughout your campaign - this applies even if you've used a valuation service such as Equidam. Save your valuation for the CSF Offer campaign
- Do not: Talk about how much you're looking to raise as this may change
- Do not describe yourself as “world-first”, “unique”, “the leading”, “the only”, unless you are able to substantiate the claims (and provide evidence)
- Do not use statements such as “the Uber of X”, the “AirBnB of Y”, “the next Facebook” etc - these can be misleading (and lack credibility)
- Do not: Use vague or unsubstantiated environment or sustainability claims e.g. ‘green’, ‘kind to the planet’, ‘eco-friendly’, ‘responsible’ or ‘sustainable’
- Do not: Use third party copyrighted images, logos, music etc, unless you have permission
- Do not include any photographs or images that contradict any statement or draw attention away so as to marginalise the effect of any warnings, disclaimers or qualifications
- Do not: Include any claims (in headlines or content) that is inconsistent with the general risk warning or any risks disclosed in the CSF offer document
- Do not: Give investment advice or state or imply that the shares are suitable investment
- Do not: Make any comparisons with other products unless they have sufficiently similar features. E.g. do not compare yourself to an existing global business with 10 years operating history
- Do not: Make any statements in the pitch video or advertising that you can't make in the Offer Document
"Greenwashing" & "Greenhushing": ASIC & ACCC enforcement focus
Greenwashing & greenhushing are key enforcement focus areas for both ASIC & the ACCC.
In its draft guidance, the ACCC defines an environmental claim as any representation a business makes in relation to its environmental impact, including claims that give the impression that a business, products or services have a neutral or positive impact on the environment, are less harmful for the environment than alternatives; and/or have specific environmental benefits.An environmental claim that is false or misleading is known as ‘greenwashing’. The ACCC considers a business will engage in greenwashing where they use any claim that makes a product, service or business seem better or less harmful for the environment than it really is.
ASIC: Greenwashing in capital raising
ASIC has recently highlighted that greenwashing continues to be a particular focus in its oversight of capital raisings.
What is greenwashing and why is it a concern?
In relation to investments, 'greenwashing' is the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical.Greenwashing distorts relevant information that an investor might require in order to make informed investment decisions. It can erode investor confidence in the market for sustainability-related products.
ASIC has provided general guidance on companies should provide in the context of capital raising:
- clear and supportable reasons to justify why you consider your products or services to be ‘clean’ or ‘green’
- reasonable grounds for any statement that is forward-looking in nature, including net zero target, and disclosure of those grounds. Investors should be provided with information about what your target is, how and when you expect to meet your target, how you will measure your progress or milestones, and any underlying assumptions.
When making any green or sustainability claims, you should consider the principles set out in ASIC’s Information Sheet 271 How to avoid greenwashing when offering or promoting sustainability-related products
ASIC interventions - May 2023 report
ASIC has undertaken both reactive and proactive surveillance in relation to greenwashing.
The work covered disclosure documents, Product Disclosure Statements (PDSs), advertisements, websites and other market disclosures. ASIC has taken a number of interventions which are summarised in its May 2023 here: Report 763 ASIC’s recent greenwashing interventions ASIC identified net zero statements and targets, and claims of decarbonisation, that did not appear to have a reasonable basis, or were factually incorrect. These representations were identified across a range of disclosures, including prospectuses, websites and market announcements. ASIC's interventions resulted in corrective disclosures.
Examples as follows:
- A company that manufactures and distributes Australian-made products removed or clarified statements in its prospectus that related to the sustainability-related characteristics of its products and the company’s sustainability practices as there did not appear to be reasonable grounds to make these statements.
- An oil and gas company removed net zero emissions statements, including a target to achieve net zero emissions by 2050, from its prospectus. The company was unable to provide additional information about how the targets would be achieved and the potential feasibility of achieving them.
- A mining company qualified its ‘clean green’ claims in its prospectus. The company had not completed studies that assessed the feasibility of adopting renewable energy sources or other carbon abatement strategies that would be required to achieve a lower carbon footprint. The disclosure was amended to make clear that this was a future-focused aspiration only.
Questions to consider
- Is your product true to label?
- Have you used vague terminology? e.g. ‘Socially responsible’, ‘ethical investing’, and ‘impact investing’.
- Are headline claims potentially misleading?
- Have you explained how sustainability-related factors are incorporated into investment decisions and stewardship activities? e.g. stating that a product ‘takes into account sustainability factors’ without saying how, is inadequate.
- Have you explained investment screening criteria? Are any criteria subject to exceptions or qualifications?
- Do you have any influence over the benchmark index? If so, is your influence accurately described?
- Have you explained how you use any metrics related to sustainability?
- Do you have reasonable grounds for a stated sustainability target? Have you explained how this target will be measured and achieved?
- Is it easy for investors to locate and access relevant information?
ACCC: Greenwashing
ACCC is currently focus on environmental & sustainability claims:
We strongly recommend you seek legal advice before doing so.
- Product specific claims: Packaging, websites, advertisements or social media posts by influencers
- Company-wide claims: Appear on websites or in corporate social responsibility statements and reporting documents
- Claims using logos and symbols (including certification trademarks): Product packaging, websites, or advertisements
Why is it a concern?
A misleading, meaningless, or unclear claim breaches consumer trust and hurts confidence in both the claim itself and sustainability claims in general.
ACCC finding - March 2023 report
To understand the nature and prevalence of environmental and sustainability claims made by businesses in Australia, the ACCC conducted an internet sweep in October 2022 & released its findings in March 2023. Access the ACCC report here: Greenwashing by Australian businesses
Key issues identified in the sweep:
- Vague and unqualified claims e.g. terms like: ‘green’, ‘kind to the planet’, ‘eco-friendly’, ‘responsible’ or ‘sustainable’
- A lack of substantiating information
- Use of absolute claims e.g. absolute claims like: 100% plastic free; 100% recyclable; made from 100% recycled content; non-polluting; 100% carbon positive; zero emissions
- Use of comparisons
- Exaggerating benefits or omitting relevant information
- The use of aspirational claims, with little information on how these goals will be achieved
- Use of third-party certifications
- Use of images which appear to be trustmarks
In July 2023, the ACCC issued its draft guidance for businesses making environmental and sustainability claims. Its draft guidance outlines eight “good practice” principles for business in helping them comply with their obligations under the Australian Consumer Law.
ACCC draft guidance
- Make accurate and truthful claims (Do not overstate level of scientific acceptance, do not exaggerate benefits or understate harm, comparisons must be transparent and fair)
- Have evidence to back up your claims
- Don’t leave out or hide important information
- Explain any condition or qualification on your claims
- Avoid broad and unqualified claims (Commonly used terms that are overly broad and vague include ‘green’, ‘environmentally friendly’, ‘eco-friendly’ and ‘sustainable’)
- Use clear and easy-to-understand language
- Visual elements should not give the wrong impression
- Be direct and open about your sustainability transition
Advertising to investors outside of Australia
CSF offers on Birchal are offers of securities in Australia by Australian companies under the CSF regime.Different jurisdictions have different laws against advertising offers of securities to the public (e.g. NZ, USA, UK securities laws. You should not actively advertise your EOI and CSF offer campaigns outside of Australia, otherwise you may be in breach of those laws.If you do advertise your CSF offer outside of Australia, you would need to comply with the securities laws of the other jurisdiction . We strongly recommend you seek legal advice before doing so.
Important
This page is intended as a guide only and is not a substitute for legal advice. We recommend you always speak with your legal adviser to understand how the law and ASIC's guidance might apply to your own activities.
