By Brian Croce
Source: Pensions & Investments
The Securities and Exchange Commission on Wednesday approved a rule proposal that would require investment advisers and fund managers to disclose additional information on ESG strategies in fund prospectuses, annual reports and adviser brochures.
In a 3-1 vote, with the commission’s lone Republican, Hester M. Peirce, dissenting, the SEC proposed amendments to rules and disclosure forms that aim to promote consistent, comparable and reliable information for investors concerning funds’ and advisers’ incorporation of environmental, social and governance factors.
Under the proposal, funds that consider ESG factors in their investment process would be required to disclose additional information regarding their strategy. The amount of required disclosure depends on how central ESG factors are to a fund’s strategy and follows a “layered” framework, according to an SEC fact sheet. The layered framework starts with “a concise overview in the prospectus supplemented by more detailed information in other sections of the prospectus or in other disclosure documents,” the fact sheet noted.