Independent sustainable verification needed amid greenwashing crackdown
Over three-quarters of consumers say they would be more likely to invest in products that were verified by an independent source as being responsible, with greenwashing fears on the rise.
The bi-annual Responsible Investment Association Australasia’s (RIAA), From value to riches 2024: Charting consumer demand for responsible investing in Australia, produced in association with Australian Ethical surveyed over 2,000 Australians for the research.
Overall, 88 per cent of respondents said they expect their investments to be responsible and ethical, up from 83 per cent in 2022. Only 5 per cent of Australians said they have negative perceptions about responsible investing, and 76 per cent said they would consider moving funds if their current option did not align with their values.
Greenwashing has been a key enforcement priority for the consumer regulator with multiple firms coming under ASIC’s spotlight for alleged false or misleading statements or misleading conduct. These firms include global investment giant Vanguard, superannuation fund Active Super and asset manager Northern Trust Asset Management.
In light of this matter, RIAA said this is being noticed by consumers, with the number of those who are concerned about greenwashing rising from 72 per cent in 2022 to 78 per cent.
To combat this, they suggested products be verified by an independent source as being responsible would make them more likely to invest in them. Some 79 per cent said they would invest more if this was the case.
Estelle Parker, co-chief executive of RIAA, who took over from Simon O’Connor last year alongside co-CEO Dean Hegarty, said: “It is fantastic to see Australians demanding more from their investments. They want their money to work for them, deliver good returns and also make a positive difference. Australians are increasingly concerned about greenwashing and rightfully so.
“This study shows Australians are attuned to the important role independent verification plays in helping ensure investments truly align with responsible practices, allowing investors to make informed choices and contribute to a sustainable future.
“As consumers seek more transparency and alignment with their values, it’s crucial for financial institutions to step up and offer a wider range of responsible investment options, backed up by robust processes and third-party verification.”
In the RIAA’s annual 22nd Benchmark Report last September, it asked respondents what was a key deterrent to responsible investment growth and 62 per cent said “mistrust or concerns around greenwashing”. This was up from less than a quarter (23 per cent) in the previous year.
AUTHOR
Laura Dew
Recommended for you
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
Responsible investment performance concerns have lessened as the market hits $1.6 trillion in AUM, according to RIAA’s annual report, but greenwashing fears among asset managers are on the rise.
Research by Morningstar has found fixed income funds are bucking a general trend around managed fund fee dispersion with a smaller fee dispersion compared to equity ones.
As investors seek to diversify their portfolios, the naming of bond labels has broadened out to include green, social and impact bonds, according to the annual RIAA report.
