Staff’s views on the types of ESG-related statements that may and may not be included in the sales communications of each of the different types of funds covered in this Notice are as follows:
- ESG Objective Funds: An ESG Objective Fund may include statements in its sales communications that accurately reflect the extent to which the fund is focused on ESG, as well as the particular aspect(s) of ESG that the fund is focused on.
- ESG Strategy Funds: An ESG Strategy Fund may include statements in its sales communications that accurately reflect the types of ESG strategies used by the fund and the extent to which the fund uses ESG strategies. However, such funds should not exaggerate the extent of the fund’s focus on ESG in their sales communications.
- ESG Limited Consideration Funds: An ESG Limited Consideration Fund may include statements in its sales communications regarding the fund’s use of ESG strategies as part of its investment process (including its consideration of ESG factors), but such statements should: (a) be clear about he limited role that the consideration of ESG factors plays in the fund’s investment process, including identifying the specific parts of the investment process in which ESG factors are considered, the weight given to ESG f actors, and the impact that ESG factors will have on the portfolio selection process; and (b) only be included if disclosure relating to the limited role that the consideration of ESG factors plays in the funds’ investment process (including identifying the specific parts of the investment process in which ESG factors are considered) is included in the prospectus.50 For greater clarity, this includes sales communications relating to the IFM’s ESG investing approach where the consideration of ESG factors plays a limited role in the investment process.
- Non-ESG Funds: A Non-ESG Fund should not refer to ESG in its sales communications, with the exception of factual information about the ESG characteristics of its portfolio (such as fund-level ESG ratings, scores or rankings, or ESG metrics). However, the factual information about the ESG characteristics of its portfolio should not be framed in a way that suggests that the Non-ESG Fund is aiming to achieve any ESG-related goals or is trying to create a portfolio that meets certain ESG-related criteria.
In staff’s view, sales communications that promote an IFM’s ESG approach to managing its funds should be clear about how the IFM’s ESG approach applies to all of its funds, to the extent that the application of the ESG approach or use of different strategies varies across different funds.
Staff have noticed that some ESG-Related Funds provide more detail about the fund’s ESG strategies in their sales communications than they do in their prospectuses. Staff remind IFMs that a prospectus must provide full, true and plain disclosure of all material facts, including the investment strategies of the fund.
50 See the guidance above on investment strategies disclosure for ESG Limited Consideration Funds under “ESG Limited Consideration Funds”.