The statements in question were made between August 2018 and February 2021, ASIC said.
The bond index fund tracks the Bloomberg Barclays MSCI Global Aggregate SRI Exclusions Float Adjusted Index, which Vanguard claimed excluded issuers with significant business activities in industries such as those involving fossil fuels.
However, Vanguard did not conduct ESG research over a large number of issuers of the bonds in the index, ASIC said. The regulator found in 2021 that 27 bonds collectively issued by 14 issuers in the fund violated ESG criteria by having ties to fossil fuels, including activities linked to oil and gas exploration.
"We consider that the screening and research undertaken on behalf of Vanguard was far more limited than that being promised to investors, and we consider this constitutes another example of greenwashing," said Sarah Court, ASIC deputy chairwoman, in the statement.
"ASIC will continue its focus on alleged greenwashing conduct and we continue to stress to the financial services industry that if exclusions in investments are promised, these exclusions need to be applied and promises upheld," she added.
In a statement responding to the proceedings, Vanguard said that it self-identified and self-reported the breach to the regulatory in early 2021.
"There was never any intention to mislead, but Vanguard recognizes it has not lived up to the high standards it holds itself accountable to and apologizes for the concern this matter may cause for our clients," the statement wrote.
Vanguard Investments Australia had A$112 billion ($74.1 billion) in assets under management as of June 30.
ASIC is seeking declarations and pecuniary penalties from the federal court, as well as orders requiring Vanguard to publicize contraventions found by the court.
The regulator has issued over A$140,000 in infringement notices over greenwashing concerns, including three infringement notices totaling A$39,960 against Vanguard for separate greenwashing conduct.
