Public Citizen Urges SEC to Finalize Transparency Rules for Environmental, Social, and Governance Investment Funds
WASHINGTON, D.C. – This week Public Citizen is urging the Securities and Exchange Commission (SEC) to act swiftly to finalize its proposed Environmental, Social, and Governance (ESG) Investment Funds Disclosure Rule to protect investors, enhance transparency, and improve capital market efficiency. The proposed rule is aimed at providing investors with more detailed information about how investment funds and advisors evaluate ESG factors and preventing companies from misleading investors.
“The ESG investment framework has been one of the fastest growing investment classes in the past decade. Since the SEC proposed this rule in 2022, we have supported its goal of providing investors with more detailed information about how investment funds and advisors evaluate ESG factors,” wrote Lisa Gilbert, Executive Vice President of Public Citizen, in a letter to the SEC sent on April 10. “Increasing disclosure by investment managers and advisors is squarely within the SEC’s mandate because transparency is key to efficient capital markets and investor protection.”
“In an investment marketplace that is evolving rapidly, retail investors who want to put their money into sustainable investments rely on the SEC to take effective actions to keep the marketplace honest and ensure they receive accurate information. The time is ripe for the SEC to follow-through and finalize this rule to curb misleading investment practices and better protect investors. Sunlight helps deter deceptive practices,” noted Gilbert.
The proposed ESG Investment Funds Disclosure Rule would complement the Investment Company Names Rule that was finalized by the SEC last year. That rule was designed to address names that are likely to mislead investors about an investment company’s investments and risks. Companies covered by the rule include mutual funds, ETFs and business development companies, including environmental, social and governance funds.