Investors are becoming more interested in ensuring their investments are sustainable or aligned with their investment objectives. In response to this demand, issuers of financial products are increasingly offering products that include sustainability-related characteristics.
This guidance sets out the FMA’s expectations of good practice for disclosure and communication and explains how the fair dealing provisions in Part 2 of the Financial Markets Conduct Act 2013 (FMC Act) and the disclosure obligations in Part 3 of the FMC Act apply to sustainability‑related claims. The guidance is intended to help issuers understand how these requirements may apply when describing the sustainability features of their products.
As sustainable finance practices, terminology and standards continue to evolve, issuers should familiarise themselves with the principles outlined in the guidance, which are summarised below.
Key principles
1. Claims need to be clear
Use plain language and avoid vague or technical statements, and ensure the overall impression created is not misleading. Explain what the product is claiming to deliver, the approach you will take and how you will implement this – particularly where there are limitations to that approach.
2. Substantiate your claims
Be able to support sustainability-related claims with evidence at the time the claim is made, rather than basing claims on unsupported opinions and/or assumptions that do not have reasonable grounds.
3. Messages need to be consistent
Ensure all sustainability‑related messaging is consistent, accurate, and not misleading across every platform. Use consistent terminology and tone across all communications, prominently highlight any exceptions or qualifications. Keep links up to date.
4. Third-party involvement is effectively managed
Even when third-party services are used, responsibility remains with the issuer. Issuers need to ensure third-party services align with their own claimed practices and disclosures. Consider disclosing who third parties are. Where external assurance or certification is used, clearly explain the scope of the assurance and where investors can find more information.
This guidance applies to all products that incorporate sustainability-related considerations into their investment strategy, regardless of how they are advertised, described or marketed. It replaces guidance previously issued in the 2020 Disclosure Framework for Integrated Financial Products and the review observations contained in the 2022 Integrated financial products: Review of managed fund documentation.
Download the Sustainability-related disclosure guidance [800KB]
