Australia's Department of the Treasury consults on a sustainable investment product labelling and disclosure regime targeting 2027 commencement

Australia's Department of the Treasury has published a consultation paper seeking views on policy options for a Sustainable Financial Product Labelling framework for investment products marketed as “sustainable” or similar, aimed at improving comparability for retail investors and reducing greenwashing risks. The paper sets out proposed design choices across four core elements: scope, consumer-facing disclosures, thresholds and evidentiary assessment. Scope options centre on capturing products that use sustainability or ESG-related terms in product names or marketing, drawing on the Corporations Act definition of “financial product” and a non-exhaustive list of common terms. For disclosure, Treasury canvasses a mandatory consumer-facing disclosure document (as a prescriptive, principles-based or hybrid template), intended to sit alongside existing product disclosure statements, and notes investor research suggesting low use of current documents (including 14 per cent consulting product disclosure statements and 3 per cent reading target market determinations in an ASX survey). On thresholds, options include prescribing a minimum aligned-asset threshold (with reference to international approaches in the 70 to 80 per cent range) or requiring disclosure of the proportion aligned, with a possible “no conflicting assets” requirement for the remainder. A principles-based evidentiary approach is also proposed, requiring sustainability claims to be supported by robust, credible evidence and record-keeping. Feedback will inform ongoing policy development, further stakeholder engagement and enforcement design, with the Sustainable Finance Roadmap indicating a target of 2027 for commencement subject to final policy decisions.