Changes to fundamental investment objectives: Since the fundamental investment objectives of the fund should reference the aspect of ESG included in the name of the fund,29 where a fund intends to change its name to add or remove a reference to ESG, the fund should consider whether it should also change its fundamental investment objectives in accordance with Figure 3. The guidance in Figure 3 is also applicable to a fund that intends to change the reference to ESG in its name in such a way as to change the ESG focus of the fund to a different ESG focus, such as changing a fund’s name from XYZ ESG Fund to “XYZ Carbon-Neutral Fund” or “ABC Clean Water Fund” to “ABC Sharia Fund”.
Prior securityholder approval: Staff remind IFMs that the addition or removal of references to ESG, or a change to the type of ESG focus of the fund, in the fundamental investment objectives of a fund requires prior securityholder approval, as illustrated in Figure 3.30
Changes to underlying fund: Some ESG Objective Funds have investment objectives that indicate that it invests in a single, named underlying fund. For such funds, if the ESG focus of the underlying fund, as identified in the investment objectives of the underlying fund, is changed or removed altogether, staff’s view is that there has been a change to the fundamental investment objectives of the top fund.
Changes to investment strategies: Staff note that a fund that does not have ESG-related investment objectives may still use ESG strategies and may therefore reference ESG in its investment strategies disclosure without referencing ESG in its name or indicating that the fund is focused on ESG in its sales communications. Where an ESG strategy is not a material or essential aspect of a fund and is therefore not included in the fund’s fundamental investment objectives, a fund that adds, revises or removes disclosure about the ESG strategy in its investment strategies disclosure is not subject to the requirement to obtain prior securityholder approval requirement, as illustrated in Figure 3.
Figure 3.
29 See the guidance above under “Investment objectives and fund names”.
30 Paragraph 5.1(1)(c) of National Instrument 81-102 Investment Funds (NI 81-102).