Where can I go to read about the minimum requirements for RIAA certification?
The Responsible Investment Standard and accompanying Guidance and Assessment Notes can be found here.
Why does the Responsible Investment Standard allow for investments in bad sectors? How can that be responsible?
RIAA’s Certification Program champions all approaches to Responsible Investment. Product/service certification is targeted at the recognition of true-to-label responsible investment products which meet the Responsible Investment Standard.
RIAA recognises that industries that have negative impacts on people and/or planet do not become ‘good’ overnight. A combination of investment approaches is necessary in markets actively transitioning their economies away from dependence on environmentally harmful commodities toward less harmful alternatives. This may include establishment of negative screening thresholds, active ownership (stewardship), and positive screening in support of the transition.
Does getting certified mean ASIC won’t sue us for greenwashing?
The Certification Program cannot guarantee that getting certified means a product issuer will not be sued for greenwashing.
We see certification as a means of mitigating the risk of deviating from regulator guidance which is aligned with what we expect in terms of truth in labelling, articulation of strategy, substantiation of claims, precision in Responsible Investment commitments and avoiding exaggeration. RIAA certification is a very strong way to mitigate this risk as it provides the third-party verification. RIAA’s certification program has been mentioned by ASIC Commissioner Joe Longo, noting that some fund managers had specified RIAA as supporting them in meeting regulatory requirements.
I think a certified product is greenwashing – how do I tell you about it?
As all certified product providers agree to participate in good faith in the Program’s Concerns & Grievance Policy and Procedures with a view to protecting the reputation of responsible investment peers, individual investors and/or the responsible investment industry as a whole. If you believe this is not being fulfilled, please write to us at operations@responsibleinvestment.org following the process in the linked policy.
Are there negative impacts through portfolio holdings that are too significant for a product to achieve RIAA Certification?
The Responsible Investment Standard principle of “Avoiding Significant Harm” has specific applications related to tobacco, manufacture of nicotine alternatives, controversial and nuclear weapons, due to the indiscriminate harm these products cause. The Certification Program conducts a review of the portfolio holdings of the product, supported by partner research databases to ensure that it meets the Standard. If the product contains holdings with direct exposure to these sensitive/ destructive industries, remediation is required before it can successfully achieve Certification. For other categories of negative impact, RIAA Certification requires products/services to be transparent with the market about their investments by ensuring accurate and fit-for-purpose policies, processes, practices and disclosures are in place.
Do providers of certified products have a responsibility to report changes/ omissions in their RI strategies and processes between certifications?
Yes. When a product is certified, the product provider is required to complete a license agreement with RIAA that includes an ongoing requirement to communicate all material updates and changes to the product.
Is certification another smart greenwashing move?
No. RIAA’s Certification Program is strongly focused on ensuring truth in labelling, examining how products define the terms used in their labels and checking that their holdings are aligned with those definitions. This includes doing deep due diligence on products to ensure they can substantiate claims made, have processes in place to deliver on the claims, meet very high standards of disclosure and would not mislead the average consumer.
Why does the certification make no differentiation between products with the highest level of RI practice and other less RI-conscious products?
RIAA’s Certification Program champions all approaches to Responsible Investment. Product/service certification is targeted at the recognition of true-to-label responsible investment products which meet the Responsible Investment Standard. Additional requirements are in place for products trading with ‘sustainable’ or ‘impact’ in the label and those that make climate-related claims.
The Sustainability Classifications Initiative helps the market differentiate between certified products, showing the degree to which sustainability is a consideration, embedded as binding investment criteria, and targeted through the product provider’s stewardship agenda.
If the Program requires a product to make changes to meet the Responsible Investment Standard, does this mean that it was found to be greenwashing?
There are a number of reasons why a product provider that applies for certification may need to make changes to their product in order to achieve it. While the Responsible Investment Standard maps to regulatory guidance on truth in labelling, the Standard and corresponding Guidance and Assessment Notes also set expectations for effective internal processes that gear a product provider toward investing responsibly. For example, providers of multi-asset products are expected to be able to demonstrate meeting a high threshold – 75% of product coverage by their Responsible Investment strategies. A product provider may also be required to have a stewardship policy. The achievement of certification could also be contingent on more comprehensive portfolio holdings disclosure or impact reporting.
Where can I go to read about the minimum requirements for RIAA certification?
The Responsible Investment Standard and accompanying Guidance and Assessment Notes can be found here.
Why does the Responsible Investment Standard allow for investments in bad sectors? How can that be responsible?
RIAA’s Certification Program champions all approaches to Responsible Investment. Product/service certification is targeted at the recognition of true-to-label responsible investment products which meet the Responsible Investment Standard.
RIAA recognises that industries that have negative impacts on people and/or planet do not become ‘good’ overnight. A combination of investment approaches is necessary in markets actively transitioning their economies away from dependence on environmentally harmful commodities toward less harmful alternatives. This may include establishment of negative screening thresholds, active ownership (stewardship), and positive screening in support of the transition.
Does getting certified mean ASIC won’t sue us for greenwashing?
The Certification Program cannot guarantee that getting certified means a product issuer will not be sued for greenwashing.
We see certification as a means of mitigating the risk of deviating from regulator guidance which is aligned with what we expect in terms of truth in labelling, articulation of strategy, substantiation of claims, precision in Responsible Investment commitments and avoiding exaggeration. RIAA certification is a very strong way to mitigate this risk as it provides the third-party verification. RIAA’s certification program has been mentioned by ASIC Commissioner Joe Longo, noting that some fund managers had specified RIAA as supporting them in meeting regulatory requirements.
I think a certified product is greenwashing – how do I tell you about it?
As all certified product providers agree to participate in good faith in the Program’s Concerns & Grievance Policy and Procedures with a view to protecting the reputation of responsible investment peers, individual investors and/or the responsible investment industry as a whole. If you believe this is not being fulfilled, please write to us at operations@responsibleinvestment.org following the process in the linked policy.
Are there negative impacts through portfolio holdings that are too significant for a product to achieve RIAA Certification?
The Responsible Investment Standard principle of “Avoiding Significant Harm” has specific applications related to tobacco, manufacture of nicotine alternatives, controversial and nuclear weapons, due to the indiscriminate harm these products cause. The Certification Program conducts a review of the portfolio holdings of the product, supported by partner research databases to ensure that it meets the Standard. If the product contains holdings with direct exposure to these sensitive/ destructive industries, remediation is required before it can successfully achieve Certification. For other categories of negative impact, RIAA Certification requires products/services to be transparent with the market about their investments by ensuring accurate and fit-for-purpose policies, processes, practices and disclosures are in place.
Do providers of certified products have a responsibility to report changes/ omissions in their RI strategies and processes between certifications?
Yes. When a product is certified, the product provider is required to complete a license agreement with RIAA that includes an ongoing requirement to communicate all material updates and changes to the product.
Is certification another smart greenwashing move?
No. RIAA’s Certification Program is strongly focused on ensuring truth in labelling, examining how products define the terms used in their labels and checking that their holdings are aligned with those definitions. This includes doing deep due diligence on products to ensure they can substantiate claims made, have processes in place to deliver on the claims, meet very high standards of disclosure and would not mislead the average consumer.
Why does the certification make no differentiation between products with the highest level of RI practice and other less RI-conscious products?
RIAA’s Certification Program champions all approaches to Responsible Investment. Product/service certification is targeted at the recognition of true-to-label responsible investment products which meet the Responsible Investment Standard. Additional requirements are in place for products trading with ‘sustainable’ or ‘impact’ in the label and those that make climate-related claims.
The Sustainability Classifications Initiative helps the market differentiate between certified products, showing the degree to which sustainability is a consideration, embedded as binding investment criteria, and targeted through the product provider’s stewardship agenda.
If the Program requires a product to make changes to meet the Responsible Investment Standard, does this mean that it was found to be greenwashing?
There are a number of reasons why a product provider that applies for certification may need to make changes to their product in order to achieve it. While the Responsible Investment Standard maps to regulatory guidance on truth in labelling, the Standard and corresponding Guidance and Assessment Notes also set expectations for effective internal processes that gear a product provider toward investing responsibly. For example, providers of multi-asset products are expected to be able to demonstrate meeting a high threshold – 75% of product coverage by their Responsible Investment strategies. A product provider may also be required to have a stewardship policy. The achievement of certification could also be contingent on more comprehensive portfolio holdings disclosure or impact reporting.
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