Product Labelling

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 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.