Maybe.
The Securities and Exchange Commission is going to propose standardization of environmental, social, and governance disclosures to investors and to the SEC. The vote happens at the SEC open meeting on May 25.
MATTERS TO BE CONSIDERED:
1. The Commission will consider whether to propose amendments to the rule under the Investment Company Act that addresses investment company names that are likely to mislead investors about an investment company’s investments and risks. The amendments the Commission will consider also include enhanced prospectus disclosure requirements for terminology used in investment company names, as well as public reporting regarding compliance with the new names-related requirements.
2. The Commission also will consider whether to propose amendments to rules and reporting forms for registered investment advisers, certain advisers exempt from registration, registered investment companies, and business development companies to provide standardized environmental, social, and governance (“ESG”) disclosure to investors and the Commission.
I assume the first item is to prohibit funds calling themselves “ESG funds” or “green” funds unless they meet some specific criteria.
The second is the new ESG Rule. What is it? It’s just a proposed rule so I would be guessing.
We could look to the proposed rule of Climate-Related Disclosures for Investors for public companies. That public company proposed rule is more focused on reporting greenhouse gas emissions and disclosure of climate-related risks. I don’t think its a great model for investment advisers and investment companies. I’m intrigued to find out what the SEC is trying to do with ESG.
Of course, this is yet another addition to a very busy regulatory agenda for the SEC.
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