How does RIAA certify products against the Responsible Investment Standard?
There are eight criteria that comprise the Standard. Verification against the Standard allows RIAA to ascertain that products are true-to-label, and that they are underpinned by responsible investment processes that are fit for purpose.
The Certification Program looks at Responsible Investment practices from both an organisational and product standpoint. Verifiers look for an organisational commitment to Responsible Investment, and evidence that education on Responsible Investment is provided to clients, members, consumers and investors.
At the product level, the Program requires demonstration of Responsible Investment strategies that are formal, disclosed, consistent, auditable and fit for purpose. When RIAA’s Responsible Investment Analysts and Certification Assessment Panel members review product disclosure statements, factsheets, web descriptions, and external facing policies, they verify the consistency of the approach to how investment processes and practices are documented, and portfolios are constructed. Documents must contain precise, unambiguous language and clarity for the audience.
When considering how products account for ESG, RIAA verifies if ESG investment processes are robust and consistent in ESG incorporation. Verifiers follow a trail of information to determine the robustness of the responsible investment processes that are followed as part of portfolio construction. The information gathered is triangulated to determine if responsible investment labels are clear, honest, and not misleading.
Minimum harm avoidance criteria must be met, and verifiers look for the exclusion of exposures to tobacco and nicotine alternatives production, controversial and nuclear weapons production and manufacturing in product disclosures, investment practices, and portfolio holdings.
Verifiers establish the presence of required disclosures and confirm procedures for their periodic publication. The active stewardship component of the Responsible Investment Standard requires an organisation-level stewardship policy, annual disclosures of stewardship activities (typically corporate engagement and proxy voting) where relevant to the asset class.
How does the Certification Program account for inconsistencies between underlying data providers when applying the Responsible Investment Standard?
RIAA acknowledges that different data providers that our funds use to screen for exclusions and inclusions often have different calculation methodologies when they analyse company reports and financial reports. The Program accepts that varying revenue calculation methodologies to determine exposures are in place and are not prescriptive on whether one approach is preferable to another provided the methodology is consistent with the Program’s minimum requirements on the avoidance of significant harm. RIAA requires clear disclosure of the methodology and any resulting exceptions to screens that would be expected by a typical investor.
When spot checks are conducted on product claims, more than one research database is used. Further desktop research is undertaken on flagged constituents that emerge as outliers between the different methodologies to establish consistency with claims made.
How does RIAA establish adherence to the product labelling requirements of the Responsible Investment Standard?
When conducting verification, product labels and claims are checked for correct reflection of the ESG, or sustainability characteristics /approach undertaken.
For example, if terms like ‘green’, ‘transition’, or ‘social’ are used in a product label, these need to be defined and substantiated, then explained in terms of how those attributes are embedded in the product’s responsible investment process.
Verifiers also check if portfolio holdings line up not just with stated exclusions and inclusions but also with the product label, and robust discussions take place to determine whether additional explanations may be required for certain holdings in public disclosures. The Certification Assessment Panel regularly interrogates product claims against the minimum requirements and expectations of the Program to make nuanced and thoughtful certification decisions.
If environmental and social aims or targets are set, product providers must report their progress, performance or outcomes, and their methodologies for measurement.
How does RIAA hold product providers accountable for the information they report in the certification process?
All certified products are verified to adhere to the Responsible Investment Standard. To be certified, a product must first meet eligibility criteria and commit to meeting ongoing requirements. It then undergoes a multi-step verification process that includes being assessed by the RIAA Certification Team, examined by a Certification Assessment Panel, followed by Third-Party verification. You can find a thorough overview of this process here.
When a product attains RIAA Certification, the product provider commits to keeping RIAA informed of material updates and changes.
Certified products are reassessed in full every two years to retain their certification. The recertification process is equally rigorous.
RIAA also 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.
How does RIAA certify products against the Responsible Investment Standard?
There are eight criteria that comprise the Standard. Verification against the Standard allows RIAA to ascertain that products are true-to-label, and that they are underpinned by responsible investment processes that are fit for purpose.
The Certification Program looks at Responsible Investment practices from both an organisational and product standpoint. Verifiers look for an organisational commitment to Responsible Investment, and evidence that education on Responsible Investment is provided to clients, members, consumers and investors.
At the product level, the Program requires demonstration of Responsible Investment strategies that are formal, disclosed, consistent, auditable and fit for purpose. When RIAA’s Responsible Investment Analysts and Certification Assessment Panel members review product disclosure statements, factsheets, web descriptions, and external facing policies, they verify the consistency of the approach to how investment processes and practices are documented, and portfolios are constructed. Documents must contain precise, unambiguous language and clarity for the audience.
When considering how products account for ESG, RIAA verifies if ESG investment processes are robust and consistent in ESG incorporation. Verifiers follow a trail of information to determine the robustness of the responsible investment processes that are followed as part of portfolio construction. The information gathered is triangulated to determine if responsible investment labels are clear, honest, and not misleading.
Minimum harm avoidance criteria must be met, and verifiers look for the exclusion of exposures to tobacco and nicotine alternatives production, controversial and nuclear weapons production and manufacturing in product disclosures, investment practices, and portfolio holdings.
Verifiers establish the presence of required disclosures and confirm procedures for their periodic publication. The active stewardship component of the Responsible Investment Standard requires an organisation-level stewardship policy, annual disclosures of stewardship activities (typically corporate engagement and proxy voting) where relevant to the asset class.
How does the Certification Program account for inconsistencies between underlying data providers when applying the Responsible Investment Standard?
RIAA acknowledges that different data providers that our funds use to screen for exclusions and inclusions often have different calculation methodologies when they analyse company reports and financial reports. The Program accepts that varying revenue calculation methodologies to determine exposures are in place and are not prescriptive on whether one approach is preferable to another provided the methodology is consistent with the Program’s minimum requirements on the avoidance of significant harm. RIAA requires clear disclosure of the methodology and any resulting exceptions to screens that would be expected by a typical investor.
When spot checks are conducted on product claims, more than one research database is used. Further desktop research is undertaken on flagged constituents that emerge as outliers between the different methodologies to establish consistency with claims made.
How does RIAA establish adherence to the product labelling requirements of the Responsible Investment Standard?
When conducting verification, product labels and claims are checked for correct reflection of the ESG, or sustainability characteristics /approach undertaken.
For example, if terms like ‘green’, ‘transition’, or ‘social’ are used in a product label, these need to be defined and substantiated, then explained in terms of how those attributes are embedded in the product’s responsible investment process.
Verifiers also check if portfolio holdings line up not just with stated exclusions and inclusions but also with the product label, and robust discussions take place to determine whether additional explanations may be required for certain holdings in public disclosures. The Certification Assessment Panel regularly interrogates product claims against the minimum requirements and expectations of the Program to make nuanced and thoughtful certification decisions.
If environmental and social aims or targets are set, product providers must report their progress, performance or outcomes, and their methodologies for measurement.
How does RIAA hold product providers accountable for the information they report in the certification process?
All certified products are verified to adhere to the Responsible Investment Standard. To be certified, a product must first meet eligibility criteria and commit to meeting ongoing requirements. It then undergoes a multi-step verification process that includes being assessed by the RIAA Certification Team, examined by a Certification Assessment Panel, followed by Third-Party verification. You can find a thorough overview of this process here.
When a product attains RIAA Certification, the product provider commits to keeping RIAA informed of material updates and changes.
Certified products are reassessed in full every two years to retain their certification. The recertification process is equally rigorous.
RIAA also 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.
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