Australia's Department of the Treasury published a consultation paper seeking views on policy options to underpin a Sustainable Financial Product Labelling framework, aimed at helping retail investors identify and compare investment products marketed as “sustainable” or similar. The proposed approach is positioned as a complement to climate-related financial disclosures and other Sustainable Finance Roadmap initiatives, with a government target for labelling to commence in 2027, subject to final policy decisions. The paper highlights investor confusion and greenwashing risk in a market where the Responsible Investment Association Australasia estimates AUD 1.6 trillion of Australian assets used a responsible investment approach in 2023, alongside survey evidence that many consumers struggle to compare sustainable products and 78 percent are concerned about greenwashing. It canvasses design choices including which investment approaches should qualify as “sustainable”, whether definitions should be prescribed in legislation or left to industry, what products and marketing terms or thresholds should trigger mandatory labelling, and how labels should be substantiated through prescriptive criteria, principles-based evidence, links to the Australian Sustainable Finance Taxonomy, and potential third-party certification. Existing disclosure obligations and prohibitions on misleading or deceptive conduct are noted, alongside ASIC’s greenwashing enforcement, including the Federal Court’s AUD 11.3 million penalty against Mercer Superannuation (Australia) Limited. Responses will inform a detailed design proposal, which Treasury expects to consult on further in late 2025.

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