SEC proposes enhanced ESG disclosures

The US Securities and Exchange Commission has proposed amendments to rules and reporting for ESG investment funds.

The SEC say the changes are to “promote consistent, comparable, and reliable information for investors concerning funds’ and advisers’ incorporation of ESG factors. The proposed changes would apply to registered investment advisers and investment companies.

The proposed amendments look to categorize certain types of ESG strategies and require funds and advisers to provide specific disclosures in fund prospectuses and reports on ESG strategies.

Funds focused on the consideration of environmental factors generally would 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 on 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 voting of proxies on particular ESG-related voting matters and information concerning their ESG engagement meetings.