June 2022 Sustainable Investment Update

In an attempt to keep pace with the rapid demand for ESG investment products, global regulators are stepping up their efforts to protect investors from the potentially misleading marketing practices of both asset managers and corporations alike. In the U.S., the Securities and Exchange Commission (SEC) recently proposed rules seeking to standardize climate-related disclosures.1 This is just one of several recent actions taken by the Commission targeting enhanced transparency in the ESG space, including new fund naming rules, a fine on BNY Mellon for ESG marketing inconsistencies, and an investigation into Goldman Sachs’ ESG products.2

In its open comment period, the SEC’s climate disclosure proposal garnered feedback from over 9,000 companies, trade organizations, asset managers, legislators, and even individual investors. While investors were generally supportive of enhanced climate disclosure, major concerns centered around SEC’s potential extension of its definition of materiality, the complications of mandatory scope 3 emissions disclosure, and the costs of compliance with emissions measurement and assurance requirements.

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