Australia’s proposed regime for sustainable investment product labels could destabilise its superannuation system, according to the Responsible Investment Association of Australasia (RIAA).

The association, which represents responsible and impact investors worth A$83 trillion (US$ 54 trillion), said a “one-size-fits-all” ESG labelling regime would also limit choice for pensioners, increasing costs for funds, and raising the risk of greenwashing.

The RIAA was responding to a consultation by the Australian Treasury which closed on 29 August.

‍Estelle Parker, Co-CEO at RIAA, said the proposed approach would be difficult to adopt due to the “inherently complex and diversified” nature of superannuation products.

“If the government adopts an overly prescriptive model as often seen overseas, it will not only fail to meet market demand but also limit consumer choice. We’ve seen overseas regimes stumble, losing trust and momentum. If we don’t account for Australia’s unique and diversified investment landscape, we risk repeating those same mistakes here,” she added.

Parker said the government’s proposed approach could divert capital, create unnecessary compliance costs, and weaken the global competitiveness of supers, while leaving beneficiaries with fewer options and higher costs.

Citing “united consequences” caused by sustainable fund labelling regimes in other jurisdictions, the RIAA said that high-quality investment products provided by superannuation funds ran the risk of falling below standards set by too-rigid frameworks.

“We’ve seen in the UK, the bar the Financial Conduct Authority sets for the use of the term ‘sustainable’ would, in an Australian context, convert to an impact fund. The hoops you would have to go through to qualify for that would be awfully difficult for many funds to meet. A principles-based approach for sustainable product labelling is a very sensible way of doing things,” said Lou Capparelli, Head of ESG at UniSuper.

The Australian Sustainable Finance Institute (ASFI), which is responsible for developing the country’s green taxonomy, said a sustainable fund labelling regime should provides consumers with “clear, comparable information” about sustainable investment products.

A US court ruling against a Texan law requiring proxy advisors to explain when they are using non-financial inputs in ESG-related recommendations is only a “partial victory”, according to shareholder advocacy group As You Sow.

Last Friday, a federal judge granted a temporary injunction on free speech grounds in favour of proxy advisors Glass Lewis and Institutional Shareholder Services (ISS). The ruling delays a bill, SB2337, introduced by the state’s Republican-led legislature to increase administrative barriers to integrating ESG factors into investment decisions.

As well as requiring disclosures when voting advice is based on “non-pecuniary” factors, SB2337 compels firms to provide justification whenever recommendations differ from company management.

As reported by Bloomberg, US District Judge Alan Albright of the Western District of Texas said the statute would compel speech by forcing the advisory firms to issue disclosures “they don’t think are accurate”. A trial has been set for 2 February.

But the ruling only applies to ISS and Glass Lewis, leaving the broader law intact. This leaves other actors involved in exercising shareholder voting rights vulnerable to enforcement under the law’s provisions, according to As You Sow.

“This decision affirms that Texas cannot silence financial firms simply because they provide investors with information on climate and governance risk,” said Danielle Fugere, President of As You Sow. “It’s a critical step toward restoring common sense and constitutional protections to shareholder voting.”

In addition to violating the First Amendment, As You Sow contended the law conflicted with federal securities law, which encourages fiduciaries to consider all material risks – including environmental ones.

SB2337 is one of a number of similar bills being introduced at state level which introduce barriers to the sharing and analysis of ESG information for investment purposes.

“Had this law been enforced against ISS and Glass Lewis, it would have limited how shareholders vote their proxies and mitigate climate and social risks,” said Fugere. “That’s why this ruling is so essential – and why we must keep fighting for full protection.”

Asset owners and other stakeholders have been invited to provide feedback on draft transition finance guidelines designed to direct capital to the decarbonisation strategies of high-emitting firms.

The new framework, published by the UK’s Transition Finance Council (TFC), aims to identify and evaluate credible transition plans to channel funding to firms across asset classes, jurisdictions and sectors.

The voluntary guidelines are complementary to existing global and domestic standards, and are interoperable with disclosure standards such as those developed by the Transition Plan Taskforce (TPT) and International Sustainability Standards Board (ISSB).

TFC Chair and COP26 President Lord Sharma said the guidelines “will help capital providers to assess transitioning companies – in cement, shipping and transport – in a clear and consistent manner, broadening the reach of transition finance into high-emitting companies”.

According to research provider BloombergNEF, investment in the low-carbon energy transition worldwide grew 11% to US$2.1 trillion in 2024.

The guidelines set out four principles that each address a dimension of transition plan credibility – ambition, progress, accountability, and dependencies – supported by universal and contextual factors.

The TFC said it expected asset owners to use the guidelines to guide capital allocation toward credible entities in high-emitting sectors, to support mandate-setting and investment policies, and to inform the selection or screening of asset managers, to assess the credibility of their transition finance policies.

The consultation will close on 19 September, followed by a second round of feedback in November, before the guidelines are finalised next year.

The TFC was established by the City of London Corporation and the UK government following the recommendations of the Transition Finance Market Review.