On April 9, 2021, the Division of Examinations (“Division” or “staff”) of the US Securities and Exchange Commission issued a risk alert that highlighted its observations from its recent examinations of investment advisers, registered investment companies and private funds offering ESG products and services. The risk alert also provides observations of effective practices.
Noting that the US Investment Company Act of 1940, the US Investment Advisers Act of 1940 (“Advisers Act”) and the rules under those statutes do not define “ESG” or include ESG-specific provisions, the Division made it clear that its interest in the accuracy and adequacy of disclosures provided by advisers and funds offering clients ESG investment strategies is the same as it would be for advisers and funds offering any other type of investment strategy.
This Legal Update provides further detail.