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Clear statement from SEC to ‘greenwashing’ funds

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The popularity of sustainable investing has exploded in recent years, attracting not only billions of dollars to ESG-focused funds, but also increasing scrutiny of funds with this thesis. The US Securities and Exchange Board (SEC) has recently selected ESG, which stands for environmental, social and governance, as one of its valuable focus areas for the year.

SEC will continue to focus on ESG-related advisory services and investment works, including mutual funds, exchange-traded funds, and private fund offerings, and whether registered investment advisors and registered funds “fairly explain their ESG investment approach ” He said he would review it. The portfolio selection will also focus on “possible misrepresentations of Environmental Sustainability and Governance (ESG) factors considered or included”. The SEC also announced the creation of a Climate and ESG Mission Force within its Enforcement Division to “proactively identify ESG-related abuses” in 2021.

SEC’S STATEMENT IS VERY CLEAR

The message from the SEC is clear: Investment firms will need to pay close attention to advertising, marketing, ESG statements, and other disclosures regarding ESG factors. Many funds label themselves as ESG funds without providing sufficient information.

DWS GROUP REVIEWED BY SEC

The committee focused on these headlines after The Wall Street Journal reported that DWS Group, Deutsche Bank’s wealth management arm, was exaggerating in using sustainable investment criteria to manage its assets . The SEC and Federal prosecutors are now investigating the matter.

Since being certified as SEC leader, Gary Gensler has been pushing for a framework that requires companies and fund managers, particularly those who argue that their businesses or portfolios are eco-friendly or socially responsible, to disclose more information on sustainability challenges such as climate risks. .

Earlier this year, the SEC announced a rule that requires companies to disclose their annual greenhouse gas emissions and the climate risks their businesses face. The Board recently announced that it has extended the deadline for public disclosure of the proposed rule until 17 June 2022.

GENSLER’S CLEAR STATEMENT

In a recent Twitter video, Gensler currently claims to have invested in assets that achieve ESG purposes, with at least 800 funds totaling more than $3 trillion currently investing. he noted that there was “But what information is behind the arguments that funds are green or sustainable?” the SEC leader asked. he asked.

According to a report by ISS Market Intelligence, ESG mutual fund and ETF assets in the US rose to a record $400 billion in 2021, and 133 new ESG funds were established. Also in the report, 136 funds representing approximately $300 billion in assets have started to use ESG criteria in one way or another, there are 39 old funds that have added ESG-related phrases to their names.

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