On 3 August 2022, Australia's Financial Services Council ("FSC") published FSC Guidance Note No 44 Climate Risk Disclosure in Investment Management ("Guidance Note") to provide a set of common baseline expectations for the investment management industry's approach with respect to net-zero commitments, disclosure of climate-friendly investment features and climate change risk reporting.
The Guidance Note seeks to provide practical steps, based on leading practice, to guide investment managers on how to communicate with investors regarding the relevant green or sustainable attributes of relevant products and services.
Application of the Guidance Note is on a voluntary basis. It is aimed at fund managers who:
- voluntarily report or are required to report their climate risks (including at group level); or
- launch products making climate related claims as providers of financial services to external stakeholders.
The Guidance Note was issued at a time of significant investor interest in ESG-related issues and a proliferation of 'green' or 'sustainable' products and services in Australia.
Australia joins a number of other jurisdictions around the globe that have introduced ESG fund labelling and disclosure rules. For more information, please read our earlier blog posts on the disclosure requirements introduced by the European Union, the United Kingdom, the United States, Hong Kong and Singapore.
Blake Briggs, CEO of the FSC, noted that the FSC wants consumers to have confidence that fund managers who set net zero targets are assessing their portfolios with "robust science-based methodology" and are "working with companies they invest in to reduce emissions." He also added that the guidelines would provide a "signal to government, regulators and consumers the Australian investment community sees acting on climate change risk is a top priority and is taking a leadership position on emissions reduction and meeting net zero targets."
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