When investing responsibly, language is powerful. Labels like “sustainable,” “impact,” or “leaders” shape investor expectations, and influence capital flows by signaling values. But when those labels are used without substance, they risk misleading their audience and undermining trust.
Between 2020 and 2024, 21% (AU) and 13.3% (NZ) of all uplifts required of certifying products through the RIAA Certification Program focused on truth in labelling. This was especially prevalent in exchange-traded funds (ETFs), managed accounts, and superannuation products, where the language used in disclosures often outpaced underlying methodologies.
Table 1: RIAA Certification Program trends – labelling conditions by year
The upward trend reflects growing scrutiny from both the program and regulators, particularly around greenwashing risks.
Common issues identified
- Use of “impact” without evidence of intentionality or materiality
- Portfolio exposures inconsistent with claims made
- “Leaders” used without benchmarking or performance justification
- Inconsistent language across PDS, websites, and certification directory listings
Spot checks revealed cases where product names and claims were not supported by investment practices. One product described itself as “fossil fuel free” while holding investments with indirect exposure through infrastructure and logistics. Another claimed SDG-alignment but offered no methodology for mapping holdings to goals. Issues were addressed following the program’s engagement.
Country nuances
Australian ETFs and SMAs were most frequently flagged for labelling issues, while New Zealand KiwiSaver products showed fewer discrepancies, though outdated certification directory listings and name changes created confusion.
Table 2: RIAA Certification Program trends – breakdown of labelling conditions by product type
What the Certification Program requires
RIAA's Guidance Note – Product Labelling sets principles-based expectations:
• Labels must be substantiated with evidence
• Claims must be consistent across all investor-facing materials
• Products must avoid overstating sustainability credentials
The Program has required issuers to revise product names, remove misleading terms, and align disclosures with actual holdings and strategy. In some cases, products have voluntarily removed terms like “impact” to align with the Responsible Investment Standard.
Why this matters
In a market where responsible investment is growing rapidly, clarity is essential. Labels must reflect reality over aspiration. RIAA’s Certification Program is helping to ensure that language used in product collateral is consistent and meaningful.
As regulatory pressure intensifies around Responsible Investment claims, the threshold for excellence will rise. Certification is both a safeguard and a signal of integrity.
