CPA Australia demands mandatory disclosures for “sustainable” investment products, warning consumers about misleading greenwashing claims in Australia’s investment market.
What’s happening: Australia’s largest accounting body, CPA Australia, is demanding stricter rules governing how investment and superannuation products market themselves as “sustainable,” responding to Treasury consultation on new labelling frameworks.
Why this matters: Investors need clear frameworks to identify, compare, and make informed decisions about sustainable investment products, with current vague claims potentially misleading consumers about where their money actually goes.
Australia’s investment landscape could face a major shake-up as CPA Australia warns that vague or unsubstantiated claims risk undermining consumer trust in products marketed as environmentally or socially responsible.
Watchdog sounds alarm
The accounting body’s intervention comes as the Government targets 2027 for the start of sustainable investment product labelling designed to help investors make more informed decisions about their financial choices.
Patrick Viljoen, ESG Lead at CPA Australia, says urgent action is needed to bridge the gap between consumer expectations and regulatory reality.
“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,” he said.
“We need compliance obligations to catch up with consumer expectations.”
Following global examples
The organisation points to established frameworks in other jurisdictions as potential models for Australia to adopt. International standards already require that at least 70 per cent of a product’s assets align with stated sustainability objectives, accompanied by specific naming and marketing restrictions.
“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,” Viljoen said.
Stricter rules ahead
In its joint submission with Chartered Accountants Australia and New Zealand, CPA Australia advocates for mandatory disclosures covering all products marketed with terms like “responsible,” “sustainable,” “ethical,” or “green.”
These requirements would demand both upfront and ongoing transparency about how sustainability principles are genuinely incorporated into investment processes.
“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,” Viljoen explained.
Consumer protection priority
The push for reform reflects broader concerns about greenwashing across Australia’s investment sector.
“Any reforms should ensure it becomes easier for Australians to make more ethical investment decisions and increases the accountability on product issuers,” said Viljoen.
“If a product promotes socially responsible investments, it should be clear exactly what this means and where investors’ money will be going.”
The Treasury consultation process represents a significant step towards addressing these concerns, with the Government responding to calls for clearer frameworks in the sustainable investment space.
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