- Statements regarding applicability of IFM’s ESG approach to its fund line-up: Another common sales communication issue involved statements on the websites of IFMs that suggested that all or most of the IFM’s funds consider ESG factors as part of their investment process when in reality, only a smaller subset of the IFM’s funds con sider ESG factors. This discrepancy was often identified where there were statements on the websites of an IFM that suggested that all or most of the IFM’s funds consider ESG facto rs as part of their investment process despite ESG factors not being referenced in the investment strategies disclosure in the prospectuses of those funds. In some cases, these statements did not accurately reflect that only a subset of the IFM’s funds con sider ESG factors while in other cases, these statements did not accurately reflect the limited extent to which ESG factors are considered in the investment process of most of the IFM’s funds.
- Statements regarding consideration of ESG factors throughout the investment process: A related sales communication issue that staff identified in the ESG-Focused Reviews involved statements on the websites of IFMs that suggested that the IFM considered ESG factors as part of their broader investment process when in reality, for some of t he IFM’s funds, ESG factors were only considered as part of the IFM’s stewardship activities (e.g. proxy voting and shareholder engagement), but not as part of the investment selection process.
- Statements regarding ESG-related outcomes: Staff identified several instances of sales communications that included inaccurate claims about the fund’s ESG-related outcomes. For example, some of the sales communications indicated that the fund was aiming to produce specific ESG-related outcomes or impacts, despite the fund only using a best-in-class approach. Other sales communications inaccurately indicated that certain outcomes or impacts achieved by the underlying companies were outcomes or impacts of the fund itself, while others made claims about certain outcomes or impacts without substantiating those claims.
- Inclusion of fund-level ESG ratings, scores, or rankings: Staff identified a few websites and sales communications that included fund-level ESG ratings, scores or rankings in a manner that was not consistent with the applicable guidance in the 2022 Notice. In particular, staff identified the following issues: (a) disclosing fund-level ESG ratings, scores or rankings developed by the IFM of the fund; (b) where a fund-level ESG rating was disclosed for a fund that does not have ESG-related investment objectives, not disclosing the same type of fund-level ESG rating for all of the other funds that it manages where such ratings are available; and (c) not including all of the accompanying disclosure set out in the 2022 Notice that staff believe IFMs should include in order to make the inclusion of fund-level ESG ratings in the sales communication not misleading, including, in particular, not providing a link to the fund’s website containing the same type of fund-level ESG ratings, scores or rankings for the fund o n the same periodic basis as updated by the provider over the past 12 months.
