Ethical issues reporting guidelines

THE Australian Securities and Investments Commission has released draft guidelines for the inclusion of information relating to labour standards and environmental, social and ethical factors in the product disclosure statements of investment products.

Recent changes to the Corporations Act mean investment products are now required to disclose this information in a PDS.

The changes also provide ASIC with the power to issue guidelines about the new requirement under section 1013DA of the act.

Once finalised, product issuers will be required to comply with the guidelines after the expiry of the transition agreements set out in them.

ASIC deputy executive director of consumer protection Delia Rickard said industry players would have more certainty about their new disclosure obligations in this area and consumers would be in a better position to match any investment goals they had relating to labour standards or environmental, social or ethical considerations.

"In drafting the guidelines ASIC has taken a non-prescriptive, principles-based approach as this is a relatively new area of investing where product design must be able to develop freely in a flexible environment," she said.

"ASIC will review the final guidelines in 2006 with a view to market conduct in the area."

The approach taken in the legislation and the draft guidelines allows product issuers to determine:

Whether or not they have regard to any aspect of these considerations;

Which particular factors they will have regard to; and

How they will consider them in terms of weight, methodology and the like.

The draft guidelines were developed following consultation on a discussion paper ASIC issued in December.


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