• The lack of standardized and precise ESG definitions and terms can create confusion among investors; SEC expects firms to clearly and consistently articulate how they define ESG and how they use ESG-related terms as well as to match their ESG claims with their ESG practices.
  • SEC identified ESG investing as an examination priority in 2020 and 2021 with a focus on the consistency and adequacy of disclosures, consistency between disclosures and practices, alignment of proxy voting policies, procedures, and practices; and fairness of advertising statements.
  • Deficiencies and internal control weaknesses observed in examinations of firms offering ESG products and services reflect a “disconnect” between ESG disclosures/claims and ESG practices.
  • SEC states that it is not seeking to determine the merit of any ESG strategy but to ensure that firms adhere to their own ESG claims and investors understand what they are getting when they choose a particular adviser, fund, strategy, or product. 


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