SEC proposes amendments to rules concerning funds incorporation of ESG factors
27 May 2022 US
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The U.S. Securities and Exchange Commission (SEC) has proposed amendments to rules and reporting forms to promote consistent, comparable, and reliable information for investors concerning funds’ and advisers’ incorporation of ESG factors.
The proposed changes would apply to certain registered investment advisers, advisers exempt from registration, registered investment companies, and business development companies.
The proposed amendments seek to categorise certain types of ESG strategies and require funds and advisers to provide more specific disclosures in fund prospectuses, annual reports, and adviser brochures based on the ESG strategies they pursue.
Under the proposals, funds focused on the consideration of environmental factors would be required to disclose the greenhouse gas emissions associated with their portfolio investments.
Funds claiming to achieve a specific ESG impact would be required to describe the specific impacts they seek to achieve, while summarising their progress on achieving those impacts.
Funds that use proxy voting or other engagement with issuers as a significant means of implementing their ESG strategy would be required to disclose information regarding their voting of proxies on particular ESG-related voting matters and information concerning their ESG engagement meetings.
Gary Gensler, SEC chair, says: “I am pleased to support this proposal because, if adopted, it would establish disclosure requirements for funds and advisers that market themselves as having an ESG focus.
“ESG encompasses a wide variety of investments and strategies. Investors should be able to drill down to see what is under the hood of these strategies. This gets to the heart of the SEC’s mission to protect investors, allowing them to allocate their capital efficiently and meet their needs.”
The proposed changes would apply to certain registered investment advisers, advisers exempt from registration, registered investment companies, and business development companies.
The proposed amendments seek to categorise certain types of ESG strategies and require funds and advisers to provide more specific disclosures in fund prospectuses, annual reports, and adviser brochures based on the ESG strategies they pursue.
Under the proposals, funds focused on the consideration of environmental factors would be required to disclose the greenhouse gas emissions associated with their portfolio investments.
Funds claiming to achieve a specific ESG impact would be required to describe the specific impacts they seek to achieve, while summarising their progress on achieving those impacts.
Funds that use proxy voting or other engagement with issuers as a significant means of implementing their ESG strategy would be required to disclose information regarding their voting of proxies on particular ESG-related voting matters and information concerning their ESG engagement meetings.
Gary Gensler, SEC chair, says: “I am pleased to support this proposal because, if adopted, it would establish disclosure requirements for funds and advisers that market themselves as having an ESG focus.
“ESG encompasses a wide variety of investments and strategies. Investors should be able to drill down to see what is under the hood of these strategies. This gets to the heart of the SEC’s mission to protect investors, allowing them to allocate their capital efficiently and meet their needs.”
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