U.S. SEC overview of socially accountable funds finds ‘probably deceptive’ claims By Reuters


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WASHINGTON (Reuters) – The U.S. Securities and Trade Fee on Friday mentioned it has discovered “probably deceptive” claims and insufficient controls round investing environmental, social and governance (ESG) points in a overview of funding advisors and funds.

The regulator warned funds that its overview had turned up a spread of points the place acknowledged approaches of funds or advisors didn’t match actions. That included examples with how companies dealt with proxy voting on behalf of buyers, in addition to “unsubstantiated and probably deceptive claims” relating to socially accountable funding methods.

The alert is the most recent in a collection of actions the company has taken to include local weather dangers and social and governance points into its framework for the reason that inauguration President Joe Biden.

Final month, the SEC deployed a workforce to police local weather danger disclosure points. It has additionally launched an effort to replace steering for public firms on how they share info with buyers on local weather danger and made the subject a precedence for 2021 examinations.

Socially accountable funds have grown extra common with buyers lately. A file $51 billion flooded into sustainable U.S. funds in 2020 alone, in response to Morningstar. However critics have mentioned that some could overstate their credentials to draw money.

The SEC’s examination workers, which is constant its overview, discovered situations the place companies didn’t have formal processes in place for ESG investing, although they claimed to. In some circumstances, the SEC mentioned advisors didn’t have methods to “moderately monitor” or display screen for investments in sure industries.

Within the case of proxy voting, the SEC mentioned it discovered situations the place some buyers had been advised they might vote individually on ESG-related proposals, however then had been by no means provided that likelihood.

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