The Securities and Exchange Commission is set to vote next week on rules that would crack down on the Wild West that has become environmental, social and governance (ESG) investing.
The agency said today that it will meet next Wednesday to consider whether to propose rules that would push financial firms such as asset managers to lay bare more details about their sustainability-related activities and investment products.
The SEC’s notice indicated that the agency will vote on rules that could do so in two key ways. The first would be by proposing amendments to address “investment company names that are likely to mislead investors about an investment company’s investments and risks.” The second would entail proposing amendments that would ask fund managers and investment companies to disclose, in a standardized manner, ESG-related information.
It’s too soon to say what the details of the rules would entail. But SEC Chair Gary Gensler has provided several high-level hints.
Since taking the agency’s helm more than one year ago, Gensler has made clear that the agency during his tenure would zero in on investment funds that market themselves as “green,” “sustainable,” “low-carbon” and more. Amid rising investor demand for sustainable finance options in recent years, the universe of those labels — and funds that don them — has exploded.