In responsible investment, clarity is a necessity. RIAA’s Certification Program has become a critical mechanism for lifting standards across the market. One of the most significant areas of the program’s impact between 2021 and 2024 has been the treatment of exclusions, that is, how products define, apply, and communicate what they do not invest in.
Between 2021 and 2024, 32.7% (AU) and 24.8% (NZ) of all required uplifts to certifying product practices were about exclusions for harm avoidance. Beyond technical details, this is a signal of sharpening investor expectations.
Table 1: RIAA Certification Program trends – exclusion conditions over time
*Based on an aggregation of conditions related to definitions, application, and communication of what is not invested in.
The year-on-year upward trend reflects growing scrutiny and heightened stakeholder expectations, especially around fossil fuels and controversial weapons disclosures.
Table 2: RIAA Certification Program trends – breakdown by exclusion category (Sept 2020-Dec 2024)
Spot checks in the program showed a small number of products with recurring issues in how exclusions are disclosed and substantiated.
Table 3: RIAA Certification Program spot check insights – where claims fell short
Table 4: RIAA Certification Program spot check insights - discrepancy by product type
The shift from ambiguity to accountability
Historically, terms like "tobacco-free" or "fossil fuel exclusion" have been used liberally, often without clear thresholds or consistent application. In some cases, exclusions were aspirational rather than binding. This undermines trust and creates confusion for investors who are seeking genuine alignment with their values.
RIAA's Assessment Note - Avoiding Significant Harm Minimum Requirements sets out specific expectations. Products must apply full exclusions to activities in industries such as tobacco, nicotine alternatives, and controversial weapons in a way that is measurable, consistent, and reflected across all investor-facing documentation.
Importantly, the Note also clarifies how exclusions must be applied to various product types. For example, in credit and private debt products, exclusions must extend to borrowers and beneficial owners not just the assets themselves. In index-tracking products, where exclusions are embedded in index methodology, issuers are required to demonstrate diligence that the index itself enforces the exclusion criteria.
What this means for certification
Certification is not just a badge. It is a process of verification and improvement. Through the assessment process, product issuers have revised exclusions definitions, aligned disclosures, and in some cases, divested holdings that did not meet the Responsible Investment Standard. This has led to a more consistent and transparent approach across the market.
Why this matters for investors
Investors are increasingly looking for products that align with their values. RIAA’s latest consumer research (AU and NZ) shows that approximately 75% of consumers in our region expect their money to be invested responsibly and ethically. But alignment requires clarity. When exclusions are vague or inconsistently applied, it creates risk, not just reputational risk for the issuer, but systemic risk for the industry.
Certification helps mitigate this by ensuring that exclusions are not only present but also understood. It is built on a shared language for what Responsible Investment means in practice, and it provides a framework for continuous improvement.
Looking ahead
This focus on clarity is increasingly important as product labelling regimes and sustainable finance taxonomies continue to emerge across jurisdictions, shaping how exclusions and sustainability claims are defined, disclosed and regulated.
What it means to avoid significant harm may evolve over time, but the core message remains unchanged: if a product claims to exclude something, it must be able to demonstrate how that exclusion is measured and communicated. In Responsible Investment, precision is foundational.
