SEC proposes to improve disclosures provided by some investment advisers and investment firms on ESG investing practices


Washington, DC–(Newsfile Corp. – May 25, 2022) – The Securities and Exchange Commission today proposed changes to rules and reporting forms to promote consistent, comparable and reliable information for investors regarding the incorporation by funds and advisors of environmental, social and governance (ESG) elements. The proposed amendments would apply to certain registered investment advisers, advisers exempt from registration, registered investment companies and business development companies.

“I am pleased to support this proposal because, if passed, it would establish disclosure requirements for funds and advisers that present themselves as having an ESG focus,” SEC Chairman Gary Gensler said. “ESG encompasses a wide variety of investments and strategies. I think investors should be able to drill down to see what’s under the hood of these strategies. This goes to the heart of the SEC’s mission to protect investors, enabling them to allocate their capital efficiently and meet their needs.

The proposed changes seek to categorize certain types of ESG strategies broadly and require funds and advisers to provide more specific information in fund prospectuses, annual reports and adviser brochures based on the ESG strategies they pursue. . Funds focused on taking into account environmental factors would generally 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 impact(s) they seek to achieve and summarize their progress in 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 proxy voting on particular ESG-related voting issues and information regarding their ESG engagement meetings.

Finally, to complement the ESG information offered in fund prospectuses, annual reports and advisor brochures, the proposal would require certain ESG reports on Forms N-CEN and ADV Part 1A, which are forms on which funds and advisors councilors, respectively, declare the census. type of data that informs the Commission’s roles in regulation, enforcement, review, disclosure review and policy development.

The proposed version will be published in the Federal Register. The comment period will remain open for 60 days after publication in the Federal Register.


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