Treasury has published a Consultation Paper on Sustainable Investment Product Labels to help investors and consumers understand what ‘sustainable’, ‘green’ or similar words mean when they’re applied to financial products.
The Government is implementing a range of policy and regulatory initiatives under its Sustainable Finance Roadmap to build the market structures and frameworks that can help companies, investors
and the broader community make the most of the net zero transformation and deliver a sustainable, prosperous economy.
The Roadmap outlines the Government’s target of 2027 for the commencement of sustainable investment product labelling, subject to final policy decisions.
The use of ‘sustainable’ or similar, refers to the range of terms used in the financial product industry to indicate the product considers one or more objectives beyond investment returns, including sustainability or social outcomes. It could also include impacts on people and how businesses manage themselves. In broad terms this covers environmental, social or governance factors (ESG).
The term ‘financial product’ in the Corporations Act 2001 encompasses a wide array of products, including shares, bonds, interests in a superannuation fund, interests in managed investment schemes,
life insurance, general insurance, derivatives, and margin lending facilities.
Current product naming and marketing practices vary. Terms such as ‘ethical’, ‘social’ and ‘sustainable’ are used by different product issuers to broadly indicate that the investment product is aiming to achieve broader aims beyond financial returns.
The sustainable financial product labelling framework could apply to all financial products regardless of their sustainability claims.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
