Staff’s view is that webpages on an IFM’s website and other communications that discuss the IFM’s ESG investing approach are sales communications, with the exception of Required ESG-Related Initiative Communications (as defined below), for the following reasons:
- Promoting a particular investment strategy: 81-102CP states that an advertisement or other communication that promotes any particular investment strategy would be a sales communication.47 In staff’s view, the consideration of ESG factors as part of a fund’s investment process is an investment strategy.
- Not an image advertisement: Staff are of the view that an advertisement or other communication that discusses an investment strategy used by the IFM’s funds, including an ESG investing approach, is not merely promoting the corporate entity or the expertise of the IFM,48 as the communication is promoting an investment strategy used by funds managed by the IFM, which would make it a sales communication. For greater clarity, staff’s view is that an advertisement or other communication that references ESG but that does not discuss the IFM’s ESG investing approach and only promotes the IFM’s corporate entity or the expertise of the IFM is not a sales communication.
- Inducing the purchase of securities: Staff are of the view that an advertisement or other communication that discusses an investment strategy used by the IFM’s funds, including an ESG approach, is made to induce the purchase of securities of the funds managed by the IFM,49 since investors can only obtain exposure to the investment strategy being promoted through investing in the funds.
Required ESG-Related Initiative Communications: In staff’s view, there is one circumstance in which public communications that include information about an IFM’s ESG investing approach are not sales communications. Where such communications are explicitly required to be made public as part of the IFM’s commitment to a voluntary ESG-related initiative that is: (a) administered by an organization that is not affiliated with the fund or its IFM, portfolio adviser or principal distributor; and (b) widely recognized (Required ESG-Related Initiative Communications), staff’s view is that they are not sales communications, as they do not promote the IFM’s ESG investing approach and are instead intended to fulfill the IFM’s requirements under the initiative. How ever, staff are of the view that any such communications made purely on a voluntary basis by the IFM are sales communications, as they are promotional in nature. Examples of voluntary ESG-related initiatives are included below under “Commitments to ESG-related initiatives”.
Applicability of sales communication to all of an IFM’s funds: Where a sales communication includes statements about the IFM’s ESG investing approach but does not identify a specific fund or group of funds to which the statements apply or do not apply, staff’s view is such a sales communication pertains to all of the funds managed by the IFM.
47 Subsection 2.15(3) of 81-102CP.
48 Subsection 2.15(3) of 81-102CP states the following: “The Canadian securities regulatory authorities are of the view that image advertisements that are intended to promote a corporate identity or the expertise of an investment fund manager fall outside the definition of ‘sales communication’.”
49 The definition of “sales communication” in section 1.1 of NI 81-102 includes communications that are made “to a person or company that is not a securityholder of the investment fund … to induce the purchase of securities of the investment fund”.