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CSA Staff Notice 81 -334 (Revised) ESG-Related Investment Fund Disclosure
Part E. Key Findings and Guidance
VI. Investment strategies disclosure

(a) ESG Limited Consideration Funds

An ESG Limited Consideration Fund is not required to provide disclosure in its prospectus about its use of ESG strategies (including its consideration of ESG factors in its investment process). However, staff’s view is that, where an ESG Limited Consideration Fund includes statements about the fund’s use of ESG strategies (including its consideration of ESG factors in its investment process) in its sales communications, the prospectus should include disclosure about the fund’s use of ESG strategies.20

Specifically, if an IFM of an ESG Limited Consideration Fund includes disclosure in the fund’s prospectus about its use of ESG strategies, the disclosure should clearly explain:

  • the limited role that the consideration of ESG factors and/or use of ESG strategies plays in the fund’s investment process, including the specific parts of the investment process during which ESG factors are considered, the weight given to ESG factors as a whole (rather than for each particular ESG factor), and the impact that ESG factors will have on the portfolio selection process; and
  • whether this approach is specific to the fund in question or whether it is part of the IFM’s general process that is applied across all or a segment of its funds, and if it is applied to only one or a segment of the IFM’s funds, clearly identify the fund(s).

If the IFM of an ESG Limited Consideration Fund includes such prospectus disclosure, the disclosure must still meet the standard of full, true and plain disclosure.21 Specifically, the disclosure should clearly explain the ESG strategies used, and the description of these strategies must be written using plain language22 in order to ensure that investors are able to understand the fund’s investment strategies. However, staff are of the view that an ESG Limited Consideration Fund should avoid including disproportionately extensive disclosure about the consideration of ESG factors in order to avoid misleading investors about the role that ESG factors play in the investment process of the fund.

20 See the guidance below on the sales communications of ESG Limited Consideration Funds under “Sales communications relating to a fund’s ESG focus, use of ESG strategies, etc”.
21 See Footnote 5 above.
22 See Footnote 5 above.