What guardrails does the Certification Program have in place to avoid conflicts of interest?

The Certification Program recognises that conflicts of interest can occur in any activity that involves action and/or decisions affecting certification and classifications outcomes.  

A conflicts management framework is in place to avoid and mitigate threats to independence in the Program.

The Certification Program operates under a comprehensive internal conflicts of interest policy that applies to all primary decision makers. Threats to independence are identified and regular training is conducted for all stakeholders involved in decision-making to build capacity in recognising, acknowledging and mitigating real or perceived conflicts.  

All conflicts are managed and monitored in line with the Program’s robust governance arrangements. The RIAA team is proactive in identifying conflicts of interest and regularly reviews RIAA’s and the Program’s frameworks for conflicts management.  

Declaration and disclosure of conflicts is required, and policy breaches are addressed swiftly to ensure that the Program retains its integrity.

Further information on how RIAA operates the Certification Program can be found in RIAA’s Financial Services Guide.

What does the Program do if a certified product/service is found to be in breach of the Responsible Investment Standard?

All certified products and services must adhere to the Responsible Investment Standard. If non-conformance is discovered, RIAA communicates with the product/service provider to seek clarification of the situation and requires immediate steps to resume conformance.

Once clarification is obtained, a risk-based materiality assessment of the non-conformance is undertaken to determine the nature of the non-conformance and an appropriate consequence or action, which may include to discontinue or revoke the certification.

RIAA has readily available Program Concerns and Grievances Policies and Procedures, which can be used to notify of possible instances of misrepresentation by certified products and is an essential complement to the assessment verification in maintaining the integrity and value of certification.

What does RIAA’s Australian Financial Services License mean for the Certification Program?

RIAA’s Australian Financial Services License was obtained in April 2024 in advance of the launch of Sustainability Classifications. It formalises the requirement that under Section 912A of the Corporations Act 2001 (Cth), RIAA must:  

• Provide financial services (with reference to the administration of sustainability classifications) efficiently, honestly and fairly  

• Declare and manage conflicts of interest  

• Comply with the conditions of the AFSL  

• Comply with financial services laws  

• Have available adequate resources to provide the financial services covered by the license and carry out supervisory arrangements  

• Maintain competence to provide the financial services  

• Have a compliant dispute resolution system for retail clients  

• Have adequate risk management systems in place  

In practice, achievement of the AFSL and the launch of Sustainability Classifications has led to further refinement of the Program’s operating procedures in both Australia and New Zealand, as well as the introduction of risk management and monitoring systems specific to our AFSL.

What standards does RIAA hold itself to for the credibility of its Certification Program?

The RIAA Certification Program engages in continuous improvement in line with leading practice standards for the conduct of certification programs and conformity assessments:

• Principles for Credible and Effective Sustainability Standards Systems. ISEAL Credibility Principles. ISEAL Alliance (2021), and

• ISO/IEC 17029:2019 Conformity assessment — General principles and requirements for validation and verification bodies

Annual monitoring of the Program’s processes and practices are conducted against these standards to establish ongoing alignment and identify areas for improvement.

How are standards developed in the Program?

Credible and fit-for-purpose standards development is key to RIAA’s objective of driving standards of Responsible Investment that align capital with achieving a healthy society, environment and economy.

The RIAA Certification Program has carriage of the Responsible Investment Standard and certifies products/services against it. RIAA may produce, amend or add to a Guidance or Assessment Note to ensure ongoing alignment with:

• Australian and New Zealand consumer and financial market laws

• International policy and standards developments

• RIAA’s Concerns and Grievances mechanism  

• Multi-stakeholder input

Guidance and Assessment Notes help articulate and clarify details of the Responsible Investment Standard. They are RIAA’s interpretation of the operational and disclosure practices necessary to meet the Responsible Investment Standard.  They are produced by the Certification Team, and in consultation with key internal and external stakeholders.

How often is the Responsible Investment Standard changed? What is the process?

The Responsible Investment Standard itself is a set of principles-based requirements, and is expanded upon in Guidance and Assessment Notes.  The principles-based nature of the Standard and associated guidance allows it to change and lift in accordance with industry and global standards.  

Certification Guidance and Assessment Notes codify the application of the Standard and are produced in consultation with expert internal and external stakeholders. Any changes to the Responsible Investment Standard itself require RIAA Board Approval.

RIAA may, on occasion, produce, amend or add to an Assessment Guide or Guidance Note, to ensure alignment with:  

• Australian and New Zealand consumer and financial market laws;

• International policy and standards developments;  

• System issues documented from Certification Assessment Panel meetings;  

• RIAA’s Concerns and Grievances mechanism; and/or  

• Input from other stakeholders.

What role does the Certification Assessment Panel play

The Certification Assessment Panel (CAP) plays a critical role in the implementation of the RIAA Certification Program.  

CAP constitutes an arm’s length governing body set up to make the final determination on whether a financial product meets the Responsible Investment Standard, based upon the recommendation put forward to the CAP from the RIAA Certification Team.  

The CAP brings a broad industry view to this decision-making process and includes a strong mix of skills, experiences and representation to ensure the final determination of product alignment to the Responsible Investment Standard is appropriately met. The role of the CAP is critical in ensuring strong governance in RIAA’s Certification Program, providing a level of independence from the assessment process.