Australia’s federal government has launched an expanded public consultation on a proposed sustainable investment product labelling regime that would set clear standards for how funds marketed as environmentally and socially responsible are named and described.

The latest consultation paper, released in mid-February by Treasury and supported by the Treasurer and Assistant Treasurer, invites views on core design elements including consistency, transparency, flexibility and integrity to inform the ongoing development of the framework.

This phase of consultation follows an earlier round in 2025 that focused on fundamental questions for a retail-oriented labelling regime and reflects the government’s commitment to enhancing investor confidence in products described as sustainable or related — and to reducing the risk of misleading or confusing marketing claims.

The labelling initiative forms part of the government’s Sustainable Finance Roadmap, a suite of reforms aimed at mobilising private capital to support net-zero and broader sustainability goals while modernising financial markets.

The sustainable product labels are intended to give investors reliable, comparable information about investment products that make sustainability or ESG (environmental, social and governance) claims and to help consumers and retail investors distinguish among funds with differing sustainability characteristics.

Feedback from the first conversation round, which closed in late August 2025, highlighted industry priorities such as principles-based approaches, clear terminology and the need for a regime that can accommodate a diversity of investment strategies alongside internationally consistent standards.

Stakeholders including peak industry bodies, asset managers, superannuation funds, professional associations and advocacy groups have submitted a range of views on how the labelling regime should be shaped.

Many emphasise a principles-based framework that balances rigour with flexibility, avoiding overly prescriptive rules that could constrain innovation or impose disproportionate compliance costs while still protecting investors against greenwashing.

Others propose hybrid models that combine high-level principles with some standardised criteria or disclosure elements to ensure clarity and comparability.

Submissions also underline the importance of aligning definitions and evidentiary requirements with both domestic disclosure systems and, where appropriate, international frameworks to reduce complexity for global fund managers operating in Australia’s markets.

Treasury officials have said the feedback will assist in shaping a detailed design proposal for the labelling framework, which is expected to be the subject of further consultation later this year.

The government continues to target implementation of the sustainable product labelling regime by 2027, alongside complementary reforms such as mandatory climate-related financial disclosures and the development of a sustainable finance taxonomy.

Consultations running through March aim to refine the policy approaches and ensure that the eventual framework delivers credible, usable, and proportionate standards that enhance transparency and trust in sustainable financial products across Australia’s financial system.