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.
Simon further emphasised RIAA's Responsible Investment Certification Program as an existing and highly reputable product labelling standard that has played a pivotal role in eliminating greenwashing. Simon welcomes the Treasury's acknowledgment of this program in the draft Strategy and looks forward to discussions on how it can accelerate sustainable finance efforts.
Simon said this Strategy offers a powerful tool to combat greenwashing and foster a landscape where responsible investment is not just a trend but a commitment upheld by the entire industry. "For over 17 years of running the Responsible Investment Certification Program, many superannuation funds and investment managers have voluntarily taken the right path by seeking verification from us. This new Strategy signifies a significant shift. It implies that all superannuation and investment managers following a 'responsible' investment approach will soon embark on this journey. They will need to embrace transparency in their disclosures, ushering in consistency and assurance for Australian investors."
The Treasurer's consultation paper presents Australia with an opportunity to align with global trading partners in transitioning to a sustainable finance framework. It underscores the government's vital role in shaping a sustainable finance agenda, a perspective long championed by RIAA.
As the largest and most active sustainable finance industry group in the southern hemisphere, RIAA together with our members, have been calling for such a strategy – and many of the elements outlined in this paper – for over ten years.
Australia's financial system represents a potent lever in supporting the rapid clean energy transition. With the 2030 targets looming and a $3.5 trillion pension fund, one of the world's largest, Australia stands at the forefront of global markets. Effective execution of the Sustainable Finance Strategy, with clear policy signals, will unlock this immense potential.
RIAA's role in shaping sustainable finance
RIAA's extensive experience and active role in shaping sustainable finance are evident in initiatives such as the Australian Sustainable Finance Roadmap and the world's longest-running product labelling scheme in responsible investment.
To ensure the Strategy's effective implementation, RIAA calls on the government to establish a Sustainable Finance Advisory Council, facilitating cross-sectoral collaboration among government, finance, and business. Efforts to eliminate greenwashing must build upon existing strong foundations and classification systems, empowering sustainable businesses to attract confident investors.
Simon O'Connor reaffirms RIAA's commitment to further strengthening the Strategy. "This draft Sustainable Finance Strategy provides a strong start for Australia, and we strongly welcome it. RIAA will be keen to engage closely with the Treasurer, the Treasury, and other agencies based on our years of experience and unparalleled expertise in this area."
The Strategy outlines several key areas which will be fundamental to achieve this, including:
-We welcome the recognition of the need to strengthened action to prevent greenwashing through ESG product labelling regulations, and the acknowledgement of the opportunity to build off existing domestic approaches such as RIAA’s long-standing and world-leading Responsible Investment Certification Program
-We welcome the acknowledgement that a comprehensive Sustainable Finance Strategy must seek to reform any measures that are running counter to the Strategy’s aims, and note the urgent need for reform of the Your Future, Your Super performance test that currently disincentivises long-term sustainable investment approaches, which RIAA is already engaging constructively with Treasury on. Sensible reform on this test can deliver in the best financial interests of members whilst also ensuring alignment of superannuation with a low carbon economy, as well as sustainability themes other than climate.
-We commend the government acknowledging the critically important role of investor stewardship in supporting a stronger and more sustainable economy. We strongly support more effective and transparent investor stewardship, and there is a critical role for government to support this investment approach which RIAA research shows is now the most widely-used responsible investment approach.
-Legislating climate related disclosures, which RIAA has been strongly supportive of, with a clear view to how broader sustainability and nature disclosures can follow in their wake.
-Continuing to support the Taskforce on Nature-related Financial Disclosures (TNFD) and International Sustainability Standards Board work on sustainability disclosures. As convenor of the official TNFD Consultation Group for Australasia, RIAA calls on the government to move rapidly beyond climate to adopt the broader ISSB – and eventually TNFD - standards. This provides a further opportunity for an integrated, Whole-of-Government approach to tackling the acute and interrelated challenges of climate change and biodiversity loss, ensuring the finance sector plays its part.
-Support for a sustainable finance taxonomy that will help to articulate what are those green industries that will support a low carbon transition, which RIAA helped seed through co-Chairing the Australian Sustainable Finance Roadmap. For credibility, it will be essential that this remains deeply grounded in the science, not the politics.
-Support Whole-of-Government work to address the data gaps that RIAA’s 500-strong member base tells us are a key challenge to understanding impacts, risks (and opportunities) within investment decision-making.
-Better understanding the systemic financial risks that climate change and the net zero transition pose for our economy, and supporting credible, net zero transition planning. This will give investors certainty to make long-term decisions.
-And positioning Australia as a global sustainability leader, ensuring international alignment of Australia’s sustainable finance agenda – a no-brainer for any country seeking to remain an attractive market for investors.
ABOUT RIAA:
-RIAA has operated in the areas of responsible investment, sustainable finance and ESG for 23 years
-Today RIAA has over 500 members who manage over $US29 billion AUM, across funds management, superannuation funds, banking, insurance, financial advisers, and is the biggest representative body in our region
-RIAA was the architect of the Australian Sustainable Finance Initiative, establishing an industry led process to develop and Sustainable Finance Roadmap, with RIAA CEO being the co-chair of that three year process.
-RIAA then established the permanent body, the Australian Sustainable Finance Institute, and remains a core contributor to this body as a deputy chair of the advisory committee
-RIAA also drives international policy and standards engagement as a core member (and until recently chair) of the Global Sustainable Investment Alliance
For further information, please contact
Ada Tso Marketing & Communications Manager, RIAA, ada@responsibleinvestment.org, +61481308718
About the contributors
About the speakers
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.
Simon further emphasised RIAA's Responsible Investment Certification Program as an existing and highly reputable product labelling standard that has played a pivotal role in eliminating greenwashing. Simon welcomes the Treasury's acknowledgment of this program in the draft Strategy and looks forward to discussions on how it can accelerate sustainable finance efforts.
Simon said this Strategy offers a powerful tool to combat greenwashing and foster a landscape where responsible investment is not just a trend but a commitment upheld by the entire industry. "For over 17 years of running the Responsible Investment Certification Program, many superannuation funds and investment managers have voluntarily taken the right path by seeking verification from us. This new Strategy signifies a significant shift. It implies that all superannuation and investment managers following a 'responsible' investment approach will soon embark on this journey. They will need to embrace transparency in their disclosures, ushering in consistency and assurance for Australian investors."
The Treasurer's consultation paper presents Australia with an opportunity to align with global trading partners in transitioning to a sustainable finance framework. It underscores the government's vital role in shaping a sustainable finance agenda, a perspective long championed by RIAA.
As the largest and most active sustainable finance industry group in the southern hemisphere, RIAA together with our members, have been calling for such a strategy – and many of the elements outlined in this paper – for over ten years.
Australia's financial system represents a potent lever in supporting the rapid clean energy transition. With the 2030 targets looming and a $3.5 trillion pension fund, one of the world's largest, Australia stands at the forefront of global markets. Effective execution of the Sustainable Finance Strategy, with clear policy signals, will unlock this immense potential.
RIAA's role in shaping sustainable finance
RIAA's extensive experience and active role in shaping sustainable finance are evident in initiatives such as the Australian Sustainable Finance Roadmap and the world's longest-running product labelling scheme in responsible investment.
To ensure the Strategy's effective implementation, RIAA calls on the government to establish a Sustainable Finance Advisory Council, facilitating cross-sectoral collaboration among government, finance, and business. Efforts to eliminate greenwashing must build upon existing strong foundations and classification systems, empowering sustainable businesses to attract confident investors.
Simon O'Connor reaffirms RIAA's commitment to further strengthening the Strategy. "This draft Sustainable Finance Strategy provides a strong start for Australia, and we strongly welcome it. RIAA will be keen to engage closely with the Treasurer, the Treasury, and other agencies based on our years of experience and unparalleled expertise in this area."
The Strategy outlines several key areas which will be fundamental to achieve this, including:
-We welcome the recognition of the need to strengthened action to prevent greenwashing through ESG product labelling regulations, and the acknowledgement of the opportunity to build off existing domestic approaches such as RIAA’s long-standing and world-leading Responsible Investment Certification Program
-We welcome the acknowledgement that a comprehensive Sustainable Finance Strategy must seek to reform any measures that are running counter to the Strategy’s aims, and note the urgent need for reform of the Your Future, Your Super performance test that currently disincentivises long-term sustainable investment approaches, which RIAA is already engaging constructively with Treasury on. Sensible reform on this test can deliver in the best financial interests of members whilst also ensuring alignment of superannuation with a low carbon economy, as well as sustainability themes other than climate.
-We commend the government acknowledging the critically important role of investor stewardship in supporting a stronger and more sustainable economy. We strongly support more effective and transparent investor stewardship, and there is a critical role for government to support this investment approach which RIAA research shows is now the most widely-used responsible investment approach.
-Legislating climate related disclosures, which RIAA has been strongly supportive of, with a clear view to how broader sustainability and nature disclosures can follow in their wake.
-Continuing to support the Taskforce on Nature-related Financial Disclosures (TNFD) and International Sustainability Standards Board work on sustainability disclosures. As convenor of the official TNFD Consultation Group for Australasia, RIAA calls on the government to move rapidly beyond climate to adopt the broader ISSB – and eventually TNFD - standards. This provides a further opportunity for an integrated, Whole-of-Government approach to tackling the acute and interrelated challenges of climate change and biodiversity loss, ensuring the finance sector plays its part.
-Support for a sustainable finance taxonomy that will help to articulate what are those green industries that will support a low carbon transition, which RIAA helped seed through co-Chairing the Australian Sustainable Finance Roadmap. For credibility, it will be essential that this remains deeply grounded in the science, not the politics.
-Support Whole-of-Government work to address the data gaps that RIAA’s 500-strong member base tells us are a key challenge to understanding impacts, risks (and opportunities) within investment decision-making.
-Better understanding the systemic financial risks that climate change and the net zero transition pose for our economy, and supporting credible, net zero transition planning. This will give investors certainty to make long-term decisions.
-And positioning Australia as a global sustainability leader, ensuring international alignment of Australia’s sustainable finance agenda – a no-brainer for any country seeking to remain an attractive market for investors.
ABOUT RIAA:
-RIAA has operated in the areas of responsible investment, sustainable finance and ESG for 23 years
-Today RIAA has over 500 members who manage over $US29 billion AUM, across funds management, superannuation funds, banking, insurance, financial advisers, and is the biggest representative body in our region
-RIAA was the architect of the Australian Sustainable Finance Initiative, establishing an industry led process to develop and Sustainable Finance Roadmap, with RIAA CEO being the co-chair of that three year process.
-RIAA then established the permanent body, the Australian Sustainable Finance Institute, and remains a core contributor to this body as a deputy chair of the advisory committee
-RIAA also drives international policy and standards engagement as a core member (and until recently chair) of the Global Sustainable Investment Alliance
For further information, please contact
Ada Tso Marketing & Communications Manager, RIAA, ada@responsibleinvestment.org, +61481308718
