Product Labelling

The Responsible Investment Association Australasia (RIAA) applauds the Australian Government’s commitment to the development of sustainable finance. The 2024-2025 Federal Budget includes funding for: • the Australian Securities and Investments Commission (ASIC) and the Treasury for the development of a labelling regime for sustainability labels; • ASIC to investigate and respond to market participants engaging in greenwashing and other sustainability-related financial misconduct; • the Treasury, ASIC and the Australian Prudential Regulation Authority (APRA) to deliver the sustainable finance framework, including improving data; • the continued development of Australia’s sustainable finance taxonomy. RIAA Co-CEO Estelle Parker is pleased that the budget has recognised the importance and the urgency of developing Australia’s sustainable finance sector. “For too long, Australia was a late starter globally in recognising the opportunities provided by sustainability to all sectors, from primary industries, to manufacturing and workforce development. We must not miss out on the global capital flowing to invest in the transition to a low-carbon future – it won’t last forever.” Estelle emphasised the critical role of an internationally aligned financial product labelling regime, stating that it will help combat greenwashing and help shift capital towards funding the transition to a net-zero economy. “Our experience operating the Responsible Investment Certification Program, which is, to our knowledge, the world’s longest running responsible investment product labelling scheme, provides strong evidence for the value of a national product labelling scheme. Our internationally-aligned certification standard and rigorous application process have prompted numerous product issuers to significantly improve their product design, disclosures and marketing in order to gain certification. In fact, 70% of products seeking certification need to make changes before they can succeed. This in turn, improves the products provided to consumers and retail investors, and reduces the likelihood of greenwashing.”

Australian Treasury released its draft Sustainable Finance Strategy focusing on key areas to progress Australia’s trajectory to net-zero.

The Responsible Investment Association Australasia (RIAA) strongly welcomes the Treasurer’s Sustainable Finance Strategy as a pivotal milestone, highlighting the significant role of investment labels in the responsible investment industry. The Strategy, with one of its priorities on developing a labelling system for investment products marketed as sustainable, marks a crucial step towards aligning the finance sector with Australia’s net-zero transition. The Treasurer’s consultation paper sets the stage for a remarkable transformation in Australia’s financial landscape by introducing a labelling system for investment products marketed as sustainable. RIAA underscores the critical impact of this development on the responsible investment sector, which has been a priority outlined in the Strategy. Simon O’Connor, CEO at RIAA, acknowledged the Sustainable Finance Agenda as a significant stride towards international alignment but stresses the urgency of Australia’s actions. “The government knows it has a rare opportunity to rapidly change the landscape of investment and finance through this Strategy. But let’s not kid ourselves, whilst we’re not starting from scratch, we are late to this important policy discussion and so must move fast and leverage existing industry efforts to play catch up,” said Simon.

Paul Gregory keynote speech & the role of third party verification in the fight against greenwashing

Momentum around responsible investment and sustainable finance hit new highs in 2022, and all indicators suggest that for our own markets of Australia and Aotearoa New Zealand, this focus on embedding sustainability into finance won’t slow in 2023. 2023 is shaping up to keep us all busy, as our sector firms up its position within the core financial market settings across the globe. Currently being hardwired into the sector are codes of practice, mandatory disclosure requirements, formal labelling standards, additional scrutiny by regulators, convergence on standard definitions and elevated expectations of investment managers, asset owners and financial advisers.

The Responsible Investment Association Australasia (RIAA) has welcomed ASIC’s greenwashing guidance, saying that it will help investment managers to raise the overall quality of sustainable finance products in Australia and to better meet consumer expectations. ASIC’s new greenwashing information sheet provides clarification on the existing obligations and laws investors should comply with to avoid greenwashing, including what disclosures they should be making and how to avoid making misleading claims. “Greenwashing poses a real threat to the future of sustainable finance. Our 2021 research shows that while the majority (89%) of the Australian investment market claims to be responsible, it is just 40% of managers that are engaged in leading practice responsible investing” said RIAA CEO Simon O’Connor. “We welcome the focus on greenwashing by ASIC which reinforces that, by law, any investor making a sustainability claim must be able to substantiate this and provide supporting evidence. This guidance will be essential reading for investors and product issuers to understand how greenwashing is defined, the existing regulations they need to comply with and the questions to consider when marketing sustainability related products, such as if the product is true to label.”

Three-quarters of New Zealanders expect their KiwiSaver and investment funds to be invested ethically, with the majority considering moving funds if their values and interests do not align. This is one of the key findings of the new consumer survey by the Responsible Investment Association Australasia (RIAA) and Mindful Money. From Values to Riches 2022: Charting consumer demand for responsible investing in Aotearoa New Zealand, undertaken by Dynata, highlights that investors are not only looking for their fund providers to do well – they are looking for funds that also do good. 62% of New Zealanders report it is important to them that their investment makes a positive difference in the world. Expectations are higher among women (80%) than men (63%) and are highest among young people aged 18-24 (78%) who believe responsible investments will outperform traditional funds over the long term. Simon O’Connor, CEO at RIAA said: “This survey shows that half the population are apprehensive that fund providers are greenwashing and making misleading claims, and are demanding that their providers can back up their claims. Consumers have awoken to the opportunity to invest in line with their values but are also much more attuned to cut through the spin to find products that deliver on the most important issues for them. Three-quarters of New Zealanders expect their KiwiSaver and investment funds to be invested ethically, with the majority considering moving funds if their values and interests do not align. This is one of the key findings of the new consumer survey by the Responsible Investment Association Australasia (RIAA) and Mindful Money. From Values to Riches 2022: Charting consumer demand for responsible investing in Aotearoa New Zealand, undertaken by Dynata, highlights that investors are not only looking for their fund providers to do well – they are looking for funds that also do good. 62% of New Zealanders report it is important to them that their investment makes a positive difference in the world. Expectations are higher among women (80%) than men (63%) and are highest among young people aged 18-24 (78%) who believe responsible investments will outperform traditional funds over the long term. Simon O’Connor, CEO at RIAA said: “This survey shows that half the population are apprehensive that fund providers are greenwashing and making misleading claims, and are demanding that their providers can back up their claims. Consumers have awoken to the opportunity to invest in line with their values but are also much more attuned to cut through the spin to find products that deliver on the most important issues for them. “More than half of the population (54%) would be more willing to invest ethically and responsibly if financial products were certified or labelled as responsible or ethical by an independent third party. With the barrage of new ethical investment products in the market, consumers are increasingly questioning sustainability claims made by investment managers. They’re looking to trusted third parties like RIAA’s Responsible Investment Certification Program to do the heavy lifting, to make sure they are delivering on their claims.”

The Chartered Financial Accountants (CFA) Institute developed voluntary, global industry standards, the CFA Institute ESG Disclosure Standards for Investment Products.

The Financial Markets Authority (FMA) sought views on its proposed guidance on advertising offers of financial products under the Financial Markets Conduct Act 2013. The proposed guidance set out its expectations of what good conduct in the advertising of financial products would look like.

5 September 2019: ASFI: EU Sustainable Finance Taxonomy Briefing On 5 September, the Australian Sustainable Finance Initiative hosted a webinar discussion with Nathan Fabian, Chief Responsible Investment Officer at the United Nations-supported Principles for Responsible Investment, who provided an update on the EU taxonomy for sustainable activities.