Download the full submission here.

RIAA congratulates Treasury for its continued progress on this important initiative. The release of this second consultation represents a significant step forward in delivering on the Government’s commitment outlined in the June 2024 Sustainable Finance Roadmap.

We support the direction Treasury has taken in this second consultation. In particular, we welcome its focus on developing a policy design that recognises the importance of a principles-based approach – ensuring the regime is sufficiently robust to prevent greenwashing while retaining the flexibility needed to support future product innovation and product diversity that will support the other objectives of the Sustainable Finance Roadmap as well as other government policy priorities. The need to be adaptive is essential given that sustainability is inherently subjective and retail investor understanding and industry norms continue to evolve. We also recognise the central role that clear, consistent and comparable disclosure plays in underpinning retail investors’ access to, understanding of, and trust in sustainable investment products.

While the labelling regime and accompanying program have been introduced to protect consumers from greenwashing, it originates from the Australian Treasurer’s Sustainable Finance Roadmap which aims to increase capital flows to sustainable finance. These objectives must go hand in hand, but the implementation of these can, if not designed well, conflict with each other.

RIAA Certification Program

In the absence of a legislated framework, RIAA established the Responsible Investment Certification Program in 2005 with the aim of improving the products which are offered to consumers and retail investors and raising industry standards. As at March 2026, over 340 financial products are certified under this program. As Australasia’s leading expert and standard-setter on sustainable financial product labelling, RIAA brings over 25 years of expertise to this consultation.

It will be important that the Government ensures any regime does not undermine or penalise those in the industry who have adhered to and supported this formal, voluntary certification process that is an accepted industry standard for more than 20 years.

A well-designed labelling regime can play a critical role in preventing greenwashing and guiding capital toward sustainable outcomes. To be effective, the regime must be:

• principles-based;
• anchored in widely accepted industry standards; and
• developed in close collaboration with industry stakeholders.

It must also be fit-for-purpose for the Australian market, set a clear minimum standard to avoid greenwashing, and be ready for industry adoption from day one to meet growing consumer demand. The administration of the program and enforcement mechanisms must also be fit for purpose to ensure the regime achieves its objectives and does not undermine or disincentivise the issuance of sustainable investment options onto the market.

RIAA’s response has been informed by the input of RIAA’s diverse member base – we are grateful for the strong engagement from our membership and thank those RIAA members who contributed to the development of this submission. RIAA acknowledges that there are a number of different views across industry regarding the appropriate approach (if any) to a product labelling regime, including among RIAA’s 500-strong member base. However, through wide consultation and engagement with funds that pursue different strategies and approaches, and with over 20 years’ experience in the RIAA Certification Program, we consider our views and recommendations to be those that are best able to progress the RIAA mission and achieve the Government’s policy objectives for the implementation of the product labelling program.

Summary of recommendations

General submissions

Recommendation 1: Clearly differentiate between sustainability objectives, sustainability claims, and responsible investment approaches. The regime must explicitly allow process-based RI approaches (e.g., negative screening, ESG integration) to underpin sustainability-related claims without being treated as sustainability objectives. This distinction is essential to prevent greenhushing, avoid greenwashing, and preserve consumer clarity while accurately reflecting market practice.

Recommendation 2: Design the labelling framework with explicit regard to the relationship between retail, wholesale and institutional product markets, ensuring coherence and avoiding regulatory inconsistencies that could undermine the regime’s effectiveness.

Recommendation 3: Ensure the labelling regime reflects the current extent of retail investors’ direct access to impact products and the role of wrapped structures, while remaining aligned with established impact standards.

Recommendation 4: Only products with genuine, measurable impact objectives should be eligible to use an impact label, preventing non-impact products from misrepresenting themselves.

Recommendation 5: Develop clear, strong regulatory guidance to support a disclosure-based product labelling regime and encompass all aspects under consultation. This will ensure consistent interpretation and application of sustainability claims and objectives and align with established industry standards to minimise compliance burdens and enhance consumer clarity.

Element 1: Scope of Sustainable Investment Product Labelling

Recommendation 6: RIAA recommends retaining the Corporations Act definition as the primary inclusion threshold, with any exclusions treated as clearly justified exceptions rather than the default position.

Recommendation 7: Ensure that products are only captured by the regime where they make explicit sustainability related claims or pursue sustainability objectives, rather than solely applying whole-of-fund RI approaches.

Recommendation 8: Adopt a non‑exhaustive list of sustainability related terms supported by clear contextual guidance, ensuring that terms are interpreted appropriately and only considered sustainability related when used in a relevant descriptive context.

Recommendation 9: Terms relating to governance and social elements of ESG should be included within the scope of the regime, reflecting current market practice, retail investor expectations, and the established use of governance and social based sustainability claims.

Element 2: Consumer-facing disclosures

Recommendation 10: Introduce mandatory consumer‑facing disclosure (CFD) obligations where they are principles-based and underpinned by clear minimum standards, with the option to be complemented by a transitional voluntary phase to build issuer capability and market confidence. This should consider factors on which decisions are made wider than sustainability related factors.

Recommendation 11: Require product issuers to disclose both direct and indirect investment exclusions within the CFD, supported by clear guidance, and should clarify that the exclusions list in Box 2 is non-exhaustive to ensure flexibility and prevent misinterpretation.

Recommendation 12: Ensure that any mandatory CFD requirements are strongly aligned with the RIAA RI Standard and its accompanying guidance, drawing on the established frameworks already used across industry to enhance consistency, reduce duplication, and support meaningful, comparable disclosures.

Recommendation 13: Ensure CFD requirements are informed by targeted testing with consumers; or, where not feasible, with financial advisers who have direct insight into how retail investors interpret sustainability-related products. The requirements must support product innovation to meet evolving consumer demand and not be overly-restrictive to disincentivise sustainable investment product issuance.

Element 3: Thresholds

Recommendation 14: Adopt a principles based approach to determining which assets contribute to sustainability thresholds under both Option 1 and Option 2. Assets should only count toward a threshold where they are substantively aligned with the product’s stated sustainability objective or claim. Threshold methodologies must remain flexible to accommodate diverse investment strategies and product structures.

Recommendation 15: Draw on the RI Standard – particularly requirements for accurate labelling, honest claims, clear expectations of portfolio holdings, and transparent sustainability disclosures. Comprehensive guidance will be essential, and should align with RIAA’s Product Labelling Guidance Note and Assessment Notes on “sustainable” and “impact” labels when developing this guidance.

Recommendation 16(a): For direct vs indirect ownership, adopt a principles-based approach to the treatment of indirect investments within threshold methodologies. Indirect investments should only be included where they are material and substantively linked to the product’s stated sustainability objective or claim. RIAA recommends allowing inclusion based on either (1) majority ownership (>50%), or (2) material economic exposure, such as consolidated revenue links, with clear disclosure where indirect exposures are excluded.

Recommendation 16(b): For direct and indirect management, the framework should adopt a principles based approach to the treatment of direct and indirect investments within threshold methodologies. Both should be included where they are material and substantively linked to the product’s stated sustainability objective or claim.

Recommendation 17: Adopt a “Conflicting Assets Disclosure” principle, requiring issuers to identify and explain any assets that are inconsistent with a product’s sustainability objective. This approach fits a disclosure based regime and accommodates the diversified, benchmark constrained nature of Australian superannuation products, without introducing merit based assessments that cannot be delivered through disclosure alone.

Recommendation 18:  Adopt a principles based approach rather than prescriptive exclusions or ineligible asset lists. UK or EU-style rules are too rigid and risk limiting innovation and constraining diversified products.

Element 4: Evidentiary Assessment

Recommendation 19: Adopt a principles based approach to evidentiary assessment, ensuring that evidentiary expectations are proportionate to the type of sustainability representation being made.

Recommendation 20: Draw on the evidentiary principles embedded in RIAA’s Responsible Investment Standard, which provide a clear, credible and industry tested foundation for assessing honest, substantiated claims and transparent sustainability reporting.

Recommendation 21: The framework should not prescribe specific metrics or standards for evidentiary assessment. Instead, it should reference industry standards and guidance, including the RIAA Responsible Investment Standard, and require products to disclose the recognised methodologies applied to substantiate their sustainability claims or objectives.

Recommendation 22: Anchor the evidentiary framework in clear principles, supported by guidance, to ensure consistent application while allowing flexibility in evidentiary methods.

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