Super funds scold ‘perverse’ Treasury approach | Australian Markets

Sustainable investment product labelling ought to apply solely to merchandise marketed as ‘sustainable’ or just like retail buyers, in line with massive superannuation funds foyer group, the Association of Superannuation Funds of Australia (ASFA).

At the identical time, ASFA has pointedly criticised as “perverse” the Treasury dialogue paper on Sustainable Investment Product labelling for looking for to impose prices on merchandise not marketed or labelled as “sustainable”.

ASFA has responded to Treasury’s session additionally arguing that any regime ought to apply on the product degree, moderately than the fund degree.

The organisation stated it thought of that the regime mustn’t apply to financial merchandise that “do not promote sustainability as a key characteristic/objective, stating that the Treasury consultation’s paper rationale for doing so – to raise the cost base of products not marketed as sustainable, in order to level the playing field – “is perverse”.

“The focus of regime design when considering the cost burden on product issuers should be on regulatory efficiency,” the ASFA response stated.

“The notion that products not making sustainability claims should be penalised – for causing harm to the environment and/or society – underplay the intended outworkings of the other elements of the Government’s Sustainable Finance Roadmap,” it stated.

“For example, the regimes for climate-related financial disclosure and the sustainable finance taxonomy are expected to lead to better pricing of climate and sustainability risks.”

The ASFA submission additionally urged the Treasury in opposition to taking a legislatively prescriptive approach to investment approaches, arguing that the problem ought to be left to the industry.

“Generally, the costs of prescribing allowable investment approach would outweigh the benefits,” it stated.

ASFA argues that prescribing allowable investment approach might stifle innovation.

“There are risks that product issuers would not be able to use a new, unprescribed investment approach – that did not strictly conform to an existing prescribed approach – until incorporated in legislation,” it stated.

“This would tend to limit exploration of new investment approach in the first instance, which could have significant real-world implications. For example, so-called ‘brown to green’ strategies may not conform to explicit categories of investment approach, but can be particularly impact for net-zero transition.”