Patrick Viljoen, ESG Lead, CPA Australia.
CPA Australia
- Mandatory disclosures needed on products promoting ‘green’, ‘responsible’. ‘sustainable’ or similar investments.
- Government should consider best-practice labelling frameworks from UK and US to prevent greenwashing claims.
Australia’s largest accounting body, CPA Australia, is calling for stricter rules to govern the naming and marketing of managed investment and superannuation products to protect consumers from misleading sustainability claims.
Responding to a Commonwealth Treasury consultation on sustainable investment labels, CPA Australia warns that vague or unsubstantiated claims risk undermining consumer trust. It urges reforms to ensure that Australian investors can confidently choose products that align with their ethical and sustainability values.
Patrick Viljoen, ESG Lead at CPA Australia, says action is needed to protect investors from inaccurate or misleading sustainability claims – known as greenwashing – and to tighten the compliance obligations on the organisations making them.
“The market is awash with products that claim to be socially responsible. Consumers could understandably assess such claims as fair and accurate, under the assumption that they are underpinned by a robust regulatory framework that permits them. We need compliance obligations to catch up with consumer expectations,” he said.
“We welcome the government’s focus on creating a more robust and clear product labelling framework to help consumers invest in sustainable products with confidence and tackle greenwashing.
“Investing in the most ethical products should not be as challenging as it is. Key to fixing this should be the introduction of standardised labelling, along with mandatory disclosures to substantiate the marketing claims being made.
“This should apply to all investment products marketed as ‘responsible’, ‘sustainable’, ‘ethical’, ‘green’ or similar, and require upfront and ongoing disclosures about how sustainability is genuinely and transparently incorporated into investment processes.”
In a joint submission with Chartered Accountants Australia and New Zealand, CPA Australia encourages the government to follow examples from other countries undertaking sustainable financial product labelling reforms. It points to requirements in the UK and US that at least 70 per cent of the gross value of a product’s assets are invested in accordance with the purported sustainability objective, with specific naming and marketing rules in place.
“Any reforms should ensure it becomes easier for Australians to make more ethical investment decisions and increases the accountability on product issuers,” said Mr Viljoen. “If a product promotes socially responsible investments, it should be clear exactly what this means and where investors’ money will be going.”
About CPA Australia
CPA Australia is Australia’s leading professional accounting body and one of the largest in the world. We have more than 175,000 members in over 100 countries and regions. Our core services include education, training, technical support and advocacy. CPA Australia provides thought leadership on local, national and international issues affecting the accounting profession and public interest. We engage with governments, regulators and industries to advocate policies that stimulate sustainable economic growth and have positive business and public outcomes. A CPA is a Certified Practising Accountant. More at cpaaustralia.com.au
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