The SEC announces new rule on ESG investing claims (2023)
| Environmental, social, and corporate governance |
|---|
|
| • What is ESG? • Enacted ESG legislation • Arguments for and against ESG • Opposition to ESG • Federal ESG rules • ESG legislation tracker • Economy and Society: Ballotpedia's weekly ESG newsletter |
The Securities and Exchange Commission (SEC) on September 20 announced the implementation of a new rule that the agency says is aimed at preventing companies from making misleading marketing claims about their ESG commitments:
| “ |
Wall Street's top regulator on Wednesday adopted a new rule cracking down on so-called "greenwashing" and other deceptive or misleading marketing practices by U.S. investment funds. The changes to the two decades-old Securities and Exchange Commission (SEC) "Name Rule" requires that 80% of a fund's portfolio matches the asset advertised by its name. It takes aim at a boom in funds that have tried to exploit investor interest in environmental, social and governance, or ESG, investing with names that do not accurately reflect its investments or strategies. "A fund’s investment portfolio should match a fund’s advertised investment focus," SEC chair Gary Gensler said on Wednesday at a meeting to vote on the rule. "Such truth in advertising promotes fund integrity on behalf of fund investors." The SEC since 2021 has also focused on prosecuting ESG-related misconduct and "greenwashing", bringing enforcement actions and levying fines. … The rule also targets funds with names suggesting a focus on particular characteristics, like "growth" and "value," or particular economic themes or investment strategies, such as artificial intelligence, big data, or health innovation. Funds would also be required to define the terms they use and explain the criteria for selecting investments in their disclosures. The 80% investment requirement currently applies to other fund characteristics such as risk. As a result of the change, 76% of investment funds would be subject to the "Names Rule" up from the current 60%, SEC officials said prior to the vote.[1] |
” |
See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
| |||||||||||||||||||||||
