For the past year, the SEC has been hinting at greater scrutiny of firms with ESG investment offerings. The SEC investigation of Deutsche Bank, along with a parallel criminal investigation, demonstrates the regulator’s intent to now hold firms accountable for appropriate disclosures, data and policies on sustainable investment funds. Providing lead quotes, FrontLine’s Founder and President Amy Lynch states that the industry should expect many more ESG focused SEC reviews. Ms. Lynch comments that firms would need to demonstrate to the SEC a similar approach used with other types of investing by documenting and quantifying the ESG investment strategy with written policies and procedures. One caveat is how the SEC plans to gauge what falls under the ESG category since it’s difficult to quantify, and it may attempt to bring more clarity to its regulation in this area with the outcome of the Deutsche Bank case. See MarketWatch, “Deutsche Bank investigation will be just the beginning for ESG managers, experts warn”
Expect SEC to expand reviews of ESG managers (MarketWatch)
FrontLine Compliance
