Large ETFs Have One Year to Comply With SEC Anti-Greenwashing Rule
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The European Union and Canada are not the only major economies going after greenwashing. New Securities and Exchange Commission rules will make it much more difficult to market themselves as sustainable or ESG (environmental, social, governance.)Click here for links to information about EEA engagement solution providers.
A change in Securities and Exchange Commission (SEC) Name Rule 35d-1 passed in September 2023 will make it much more difficult to market an ETF (exchange-traded-fund) by any name or classification without a transparent basis for making that claim.
According to this report from law firm Kirkland & Ellis, “the expanded scope of the Names Rule to fund names suggesting a focus in investments or issuers with particular characteristics, including the terms growth, value, sustainable, green, or socially responsible, which are not currently covered by the Names Rule.”
The funds are required to adopt an 80% policy, meaning that “any terms used in the fund’s name that suggest either an investment focus or that such fund is a tax-exempt fund must be consistent with those terms’ plain English meaning or established industry use.”ETS must review compliance with the 80% rule quarterly.
The ETF prospectus must disclose “the definitions of any terms used in the fund’s name related to its investment focus and the specific criteria used to select the investments that such terms describe.”
ESM Is Published by The EEA: Your Source for Effective Stakeholder Management, Engagement, and Reporting
Through education, media, business development, advisory services, and outreach, the Enterprise Engagement Alliance supports professionals, educators, organizations, asset managers, investors, and engagement solution providers seeking a competitive advantage by profiting from a strategic and systematic approach to stakeholder engagement across the enterprise. Click here for details on all EEA and ESM media services.
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The EEA promotes a strategic approach to people management and total rewards through its e-newsletters, web sites, and social media reaching 20,000 professionals a month and through other activities, such as:
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