Advisers skipped in new sustainability guidance

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New guidance from the Financial Markets Authority on sustainability-related disclosures is welcome, if you can get past the title, one legal expert says.

Friday, May 15th 2026, 8:06AM 2 Comments

The regulator said the new disclosure was intended to give greater clarity on what good practice looked like for the disclosure and communication of financial products with sustainability-related characteristics.

Dentons partner David Ireland said there was much to like about the guidance, except what it was called.

“I really don’t like the new title to the guidelines. It is very challenging to find a universal or neutral title for something like this that won’t ruffle one set of feathers or another, but labelling it ‘sustainability-related disclosure guidance’, when the content covers much more than marketing products that invest with a sustainability focus, strikes me as confusing.

“Those who challenged the preciously proposed title of ‘ethical investing’ on the basis that it didn’t cover sustainability considerations seem to have overlooked the fact that values-based investing might not consider sustainability at all.

Yet all fall within the guidance,” he said.

“Having said that, we are pleased the FMA hasn’t reverted back to its ill-conceived ‘integrated financial product’ label for the guidance.

""In addition, given the target audience for the guidance is product issuers who ought to know what it covers regardless, the title of the guidance doesn’t really matter - it’s what’s behind the title that counts. In that regard, it’s pleasing to see the FMA has stuck to its guns in providing detailed practical guidance and illustrating its expectations with lots of examples, and removed some of the extraneous noise from the consultation draft. In FMA-speak, think the end product is a pretty good outcome for providers.”

He said the decision not to extend it to financial advisers was also helpful.

The FMA had a section in the original consultation targeting advisers, that was a “classic compromise that touched on things but didn’t go into enough detail to be really helpful”, he said.

“And then something buried at the back of a guidance directed at fund managers. Probably not many financial advisers would have thought to say ‘oh I should look at this piece’… it may have been useful but probably not where it was positioned and how they had spotted it.

“I think it's just a good, sensible, pragmatic approach, so this got rid of it altogether, and I think that is a good outcome.”
FMA executive director response and enforcement Louise Unger said the updated guidance supported issuers to provide investors with clear and accessible information on financial products with sustainability-related characteristics, such as environmental, social or value-based considerations, so investors could be confident that what they were investing in aligns with their investment objectives.

The guidance sets out how existing fair dealing and disclosure obligations applied when issuers promoted sustainability related characteristics in their financial products.

It said claims needed to be clear and  substantiated, messages needed to be consistent, and third-party involvement had to be effectively managed.

“It’s important that investors have the information they need to understand the nature of the sustainability-related claims made about a product so they can make well-informed decisions about their investments.”

It replaces guidance previously issued in the 2020 Disclosure Framework for Integrated Financial Products and the review observations contained in the 2022 Integrated Financial Products: Review of Managed Fund documentation.

“What you’ve got is quite detailed, still relatively principle-based but with a whole lot of examples to show how they would apply those principles in practice,” Ireland sand.

“What that does is it makes it very clear what the FMA's expectations are. So if I'm a product provider, fund manager,  whatever, I should have no doubt as to what's okay and what's not okay when I am representing the values-based or sustainability-reflected criteria that I apply for my product.

“Whether you agree with some of that detail or not, it's very clear that we've actually got rules or principles to follow and most of it is pretty logical in terms of how it goes.

"You might quibble with the odd detail or their take on things or expectations, but I think it's manageable and you are not going to be caught by surprise, which is one of the biggest fears or regulatory challenges for providers and why many can take what the FMA is called an unduly conservative approach, is because they're not quite sure what the rules are, so best play it careful because we don't want to be next week's front page news.

“What the guidance does is gives you the best chance possible of not being caught out.”

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