Be confident your sustainable investments are true to label

So, how can you ensure your client’s investments align with their perception of sustainable investment?

Simple things you can do

To ensure an investment manager’s approach to sustainability and ESG complements your clients’ views, we suggest you ask yourself two questions.

1. Is the integration of ESG factors in the investment process appropriate and relevant for the investment strategy being considered?
   Consider the manager’s beliefs on ESG and sustainability and how these are reflected in its investment process. These types of questions will help you understand how a manager approaches ESG risks and opportunities.
2. Does the process for integrating ESG factors align with the purpose and intent of the investment strategy?

Understand what the manager is trying to achieve and how they intend to use ESG information in their investment process. Does the process align with what your client is expecting, and would it fit into their portfolio?

We also recommend reading a product’s PDS and any sustainability reporting from investment managers to understand what a product does. Some investment managers provide regular reporting that may include examples of where their investment process has considered and successfully implemented sustainability practices.

You can read more about this in our article: Making sustainable investments part of your client conversations.

Industry bodies come onboard

The industry has stepped up to help advisers and investors better understand sustainable investments and identify those that are true to label.

The Responsible Investment Association Australia (RIAA) is Australia’s recognised industry body for Responsible Investing, advocating for responsible investing and a sustainable financial system. Together with its 450 members¹ (of which BT has been a member since 2000), its goal is to “promote, advocate for, and support approaches to responsible investment that align capital with achieving a healthy and sustainable society, environment and economy”.

RIAA offers tools to help investors and advisers better understand and navigate responsible investment products, including the world’s first and longest-running fund certification program and a free certified product search that yields information about where a fund fits on the spectrum of responsible investment.

The RI Certification Program

RIAA’s certification symbol distinguishes quality responsible, ethical and impact investment products. So, if a product has RIAA certification, you can be confident it’s delivering on its responsible investment promise and meeting a high standard of responsible investing.

There are eight broad requirements investment products need to achieve certification².

1. Responsible investment strategies are formal, disclosed, consistent, auditable and fit for purpose.
2. Product labels are clear, honest and not misleading.
3. Product avoids significant harm – as a minimum requirement excludes tobacco and controversial weapons producers.
4. The investment process accounts for environmental, social and governance factors.
5. Product discloses full holdings (including holdings by a fund of funds), performance, sustainability outcomes and engagement and voting practices.
6. Product is managed by active stewards and managers can detail the stewardship practices, such as engagement and voting and the improved outcomes of these practices
7. The managing organisation has a formal commitment to responsible investment.
8. The managing organisation provides educational information to members and customers about the responsible investment strategies and investment outcomes.

BT makes sustainable investing accessible to all

BT offers sustainable investment options across all asset classes and investment styles. This allows investors to fully invest in sustainable investment options or add a strategic tilt into a portfolio instead, perhaps using a thematic, sustainability or impact investment.

As of February 2022, this is the list of RIAA certified products available on BT Panorama.

While the above funds meet RIAA’s strict certification criteria and this is a great way to identify available sustainable investments, it’s important to know that not all sustainable investments have RIAA certification, so this list is not exhaustive. You should look deeper into the investment objectives and process of the manager for any sustainable investments you’re considering for your client, regardless of whether they’re certified by an industry body.