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ASIC guidance on ESG and advice processes

Putting aside the matter of approved product lists, there are a number of practical considerations for Advisers looking to build or enhance their ESG offerings to clients. From a regulatory perspective, guidance from ASIC is neutral. RG 175 suggests:

“Advice providers must form their own view about how far s961B requires inquiries to be made into their client’s attitudes to environmental, social or ethical considerations. Advice providers may need to ascertain where environmental, social or ethical considerations are important to the client, and if they are, conduct inquiries about them.”

Although not definitive, the RIAA45 suggests that, in order to satisfy their legal duty, advisers should ask clients a comprehensive set of questions, including determining whether there are any sectors the client may not be comfortable investing in. (A possible guide to the future may be seen in the EU proposal to mandate a requirement for advisers to proactively seek out the sustainability preferences of clients.)

Client fact finds which don’t currently touch on sustainability preferences could be easily amended.

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Financial Adviser Guide to Responsible Investment, Responsible Investment Association Australasia,  responsibleinvestment.org

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