ASIC releases SRI disclosure guidelines

disclosure PDS fund manager

3 September 2003
| By Craig Phillips |

TheAustralian Securities and Investment Commission(ASIC) today released its draft guidelines in relation to the product disclosure statements (PDSs) of socially responsible investment funds.

The guidelines focus on the details within PDSs concerning environmental, social and ethical factors and labour standards.

“The effect of the guidelines will be twofold. Firstly, industry players will have more certainty about their new disclosure obligations in the area,” ASIC deputy executive director consumer protection, Delia Rickard says.

“Secondly, consumers will be in a better position to choose products that match any investment goals they have relating to labour standards or environmental, social or ethical considerations.”

It appears that ASIC is attempting to phase out the notion of SRI funds by instead bundling ‘ethical’ funds in with all other funds, and leaving it to a fund manager’s discretion as to the extent it wishes to consider any of the ethical components of investing.

“The guidelines state that where product issuers do intend to have regard to some or all of these considerations [environmental, social and ethical factors and labour standards], they must tell consumers which matters they take account of and how, so that consumers can clearly understand their approach. Where there is no set approach then this too must be made clear.”

Recent reforms to the Corporations Act authorises ASIC to issue guidelines on the new PDS requirements under section 1013DA of the Act.

“In drafting the guidelines ASIC has taken a non-prescriptive, principles-based approach, as this is a relatively new area of investing where product design must be able to develop freely in a flexible environment,” Rickard says.

The draft guidelines essentially enable product issuers to determine for themselves whether or not they take account of any aspect of SRI investing, which particular factors do account for, and the extent to which the given fund will screen them in terms of methodology, and weighting.

The draft guidelines were developed following consultation on a discussion paper ASIC issued in December 2002.

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