Evergreen backs better sustainability disclosure

From

Angela Ashton

Evergreen Consultants endorses the Australian Securities and Investments Commission’s move to rid the superannuation and funds management industries of greenwashing.

ASIC has issued an information sheet for superannuation funds and managed funds, detailing its expectations for sustainability related disclosures.

The regulator said the information sheet simply sets out what was required under existing regulatory obligations, particularly the need to make sure statements about an investment product’s green credential are not misleading. It said being true to label is a regulatory ‘must-have’.

ASIC has reviewed the sustainability disclosures of super and investment products and found there was room for improvement.

Angela Ashton, Founder and Director of Evergreen Consultants, says: “The regulator is determined to have transparency and trust when it comes to representing the extent to which financial products or investment strategies are environmentally friendly, sustainable or ethical. We fully endorse that goal.

“Super and managed funds are keen to present their responsible investing credentials to the market and it is a matter of concern that ASIC has found that some industry participants need to lift their game.”ASIC said issuers need to use clear labels, define the sustainability terminology they use and explain how sustainability considerations are factored into their investment strategies.

Last year, Evergreen launched a responsible investing index, the Evergreen Responsible Investment Grading (ERIG) Index, which assigns responsible investment grades to fund managers.

Ashton says: “At the time, we noted the absence of a consistent industry approach. Now the regulator has put the industry on notice that it is time for consistency and clear communication. We will do what we can to support that development.”

ASIC has recommended that product issuers use the recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) as a framework for disclosure.

It has posed a number of questions for product issuers to use in framing their disclosures, including whether terminology is vague, whether they have clearly stated how sustainability policies are incorporated into decision-making, and whether screening criteria and sustainability metrics have been properly explained.

Ashton says: “Reporting standards in this area are developing quickly, which ASIC acknowledges in the information sheet when it says this is an evolving space.

“Evergreen is ready to work with fund managers to keep on top of these changes.”

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