Guidance on ESG-related terminology
Use of plain language: Staff remind IFMs that any description of ESG strategies and ESG factors included in a prospectus must be written using plain language, in accordance with the requirement that the prospectus provide full, true and plain disclosure of all material facts.5 Similarly, if a fund’s prospectus includes other ESG-related terms that may not be commonly understood, such as “circular economy”, “ESG headwinds”, and “science-based target”, it should provide a clear explanation of those terms using plain language.6
Plain language or established industry meaning: Staff are of the view that ESG-related terms used in the fund’s name, regulatory documents, and sales communications should be used in a way that is consistent with the plain language meaning, or, where applicable, established industry meaning, of such terms.
5 Subsection 4.1(1) of National Instrument 81-101 Mutual Fund Prospectus Disclosure ; General Instruction (5) to Form 41-101F2 Information Required in an Investment Fund Prospectus (Form 41-101F2); subsection 3B.2(1) of National Instrument 41-101 General Prospectus Requirements. See also, amongst others, subsection 113(1) of the Securities Act (Alberta), subsection 63(1) of the Securities Act (British Columbia), subsection 56(1) of the Securities Act (Ontario) and section 13 of the Securities Act (Québec).
6 See also the guidance below on complicated or non-self-explanatory ESG factors under “Investment strategies disclosure”.