CSA Staff Notice 81 -334 (Revised) ESG-Related Investment Fund Disclosure

As part of the ESG-Focused Reviews, staff identified a number of sales communication issues relating to misleading or inaccurate ESG-related statements, or statements that otherwise conflicted with prospectus disclosure.

The most common types of sales communication issues identified in the ESG-Focused Reviews are described below:

• Statements about ESG-related investment objectives and strategies: One of the most common issues raised by staff in relation to sales communications involved statements regarding the fund’s ESG-related investment objectives or strategies that were misleading or inconsistent with the fund’s prospectus disclosure.
  Some of the sales communications indicated that the fund’s ESG focus was broader than the ESG focus identified in the prospectus, such as referring to “ESG” or “social responsibility” where the focus of the fund was only one aspect of ESG, such as environmental factors or an even narrower focus, such as screening out fossil fuels. There were also inconsistencies between the description of specific ESG strategies or factors in the prospectus as compared to the sales communication.

• 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.

A sales communication pertaining to an investment fund is prohibited from including a statement that conflicts with information that is contained in the fund’s regulatory offering documents.⁴² In addition, a sales communication pertaining to an investment fund is also prohibited from being untrue or misleading.⁴³

The Companion Policy to NI 81-102 (81-102CP) lists some of the circumstances in which a sales communication would be misleading. One such circumstance is if the sales communication contains a statement that lacks explanations, qualifications, limitations or other statements necessary or appropriate to make the statement in the sales communication not misleading.⁴⁴

Another circumstance is if the sales communication contains a statement about the characteristics or attributes of an investment fund that makes exaggerated or unsubstantiated claims about management skill or techniques, characteristics of the investment fund or an investment in securities issued by the fund.⁴⁵

In addition, staff are of the view that sales communications should not contain statements that are vague or exaggerated, or that cannot otherwise be verified.⁴⁶

Sales communications, including websites, play a key role in providing information about the investment objectives, investment strategies, and performance of funds that investors may consider investing in. Therefore, sales communications relating to ESG that are true, not misleading, and consistent with a fund’s regulatory offering documents are important in order to prevent greenwashing.

⁴² Paragraph 15.2(1)(b) of NI 81-102.
⁴³ Paragraph 15.2(1)(a) of NI 81-102.
⁴⁴ Paragraph 13.1(1)1 of 81-102CP.
⁴⁵ Subparagraph 13.1(1)3(b) of 81-102CP.
⁴⁶ OSC Staff Notice 81-720 Report on Staff’s Continuous Disclosure Review of Sales Communications by Investment Funds.

Staff’s view is that webpages on an IFM’s website and other communications that discuss the IFM’s ESG investing approach are sales communications, with the exception of Required ESG-Related Initiative Communications (as defined below), for the following reasons:

• Promoting a particular investment strategy: 81-102CP states that an advertisement or other communication that promotes any particular investment strategy would be a sales communication.⁴⁷ In staff’s view, the consideration of ESG factors as part of a fund’s investment process is an investment strategy.
• Not an image advertisement: Staff are of the view that an advertisement or other communication that discusses an investment strategy used by the IFM’s funds, including an ESG investing approach, is not merely promoting the corporate entity or the expertise of the IFM,⁴⁸ as the communication is promoting an investment strategy used by funds managed by the IFM, which would make it a sales communication. For greater clarity, staff’s view is that an advertisement or other communication that references ESG but that does not discuss the IFM’s ESG investing approach and only promotes the IFM’s corporate entity or the expertise of the IFM is not a sales communication.
• Inducing the purchase of securities: Staff are of the view that an advertisement or other communication that discusses an investment strategy used by the IFM’s funds, including an ESG approach, is made to induce the purchase of securities of the funds managed by the IFM,⁴⁹ since investors can only obtain exposure to the investment strategy being promoted through investing in the funds.

Required ESG-Related Initiative Communications: In staff’s view, there is one circumstance in which public communications that include information about an IFM’s ESG investing approach are not sales communications. Where such communications are explicitly required to be made public as part of the IFM’s commitment to a voluntary ESG-related initiative that is: (a) administered by an organization that is not affiliated with the fund or its IFM, portfolio adviser or principal distributor; and (b) widely recognized (Required ESG-Related Initiative Communications), staff’s view is that they are not sales communications, as they do not promote the IFM’s ESG investing approach and are instead intended to fulfill the IFM’s requirements under the initiative. How ever, staff are of the view that any such communications made purely on a voluntary basis by the IFM are sales communications, as they are promotional in nature. Examples of voluntary ESG-related initiatives are included below under “Commitments to ESG-related initiatives”.

Applicability of sales communication to all of an IFM’s funds: Where a sales communication includes statements about the IFM’s ESG investing approach but does not identify a specific fund or group of funds to which the statements apply or do not apply, staff’s view is such a sales communication pertains to all of the funds managed by the IFM.

⁴⁷ Subsection 2.15(3) of 81-102CP.
⁴⁸ Subsection 2.15(3) of 81-102CP states the following: “The Canadian securities regulatory authorities are of the view that image advertisements that are intended to promote a corporate identity or the expertise of an investment fund manager fall outside the definition of ‘sales communication’.”
⁴⁹ The definition of “sales communication” in section 1.1 of NI 81-102 includes communications that are made “to a person or company that is not a securityholder of the investment fund … to induce the purchase of securities of the investment fund”.

As part of the ESG-Focused Reviews, staff identified a number of sales communications that required disclaimers or other explanatory language to make the sales communication not misleading. Where disclaimers or any other explanations, qualifications, limitations or other statements are necessary or appropriate to make a sales communication not misleading, staff’s view is that such language should be included in the sales communication itself, unless there are physical or technical limitations that would prevent the sales communication from including such language.

If there are such limitations, staff’s view is that the disclaimer or explanatory language should be accessible in a different document or webpage within “one click” of the sales communication. In staff’s view, the sales communication should specifically indicate that the disclaimer or explanatory language can be accessed on the other document or webpage, and where technologically possible, the link should directly lead to the disclaimer or explanatory language on that other document or webpage. In staff’s view, it is not sufficient for the sales communication to simply include a link to another document or webpage which contains the disclaimer or explanatory language if it would not be apparent from the sales communication that the disclaimer or explanatory language is contained on the other document or webpage.

Where it is not possible to include a disclaimer or explanatory language in the sales communication itself or on a different document or webpage within “one click” of the sales communication (which may be the case with billboards, television advertising, or certain forms of social media, for example) staff’s view is that the sales communication should be created or written in such a way a s to not need any disclaimers or explanatory language to make it not misleading.

A sales communication pertaining to an investment fund should 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. In staff’s view, a fund should not include statements in its sales communications that indicate that it is focused on ESG unless the fund is an ESG Objective Fund.

In general, staff’s view is that a sales communication that does not accurately reflect the extent and nature of a fund’s focus on ESG, or lack thereof, would both be misleading and conflict with the information in the fund’s regulatory offering documents.

Examples of such sales communications may include those that do any of the following:

• suggest that a fund is focused on ESG when it is not
• suggest that a fund is focused on all three components of ESG when it is only focused on one component, such as governance
• suggest that ESG factors are considered as part of the investment process of, or that ESG strategies are used by, all or most of an IFM’s fund line-up when ESG factors are only considered, or ESG strategies are only used, by a smaller subset of the IFM’s funds
• misrepresent the extent and nature of the use of ESG strategies by the fund (or by all or most of an IFM’s fund line-up), including:
  • in the case of an ESG Limited Consideration Fund, suggesting that the consideration of ESG factors plays a more significant role in the investment process than it actually does or being unclear about the limited role that the consideration of ESG factors p lays in the investment process
  • in the case of a fund where the use of an ESG strategy is discretionary, stating that the fund uses the ESG strategy without clearly disclosing that the use of the strategy is discretionary
  • suggesting that ESG factors are considered as part of the investment process as a whole where ESG factors are only considered in a specific part of the investment process (e.g. suggesting that ESG factors are considered as part of the investment selection process when they are only considered as part of the IFM’s stewardship activities)
  • failing to:
    •  disclose that there is a maximum limit to the fund’s use of those strategies;
    • actually use the advertised ESG strategies, including using different types of ESG strategies altogether; or
    • prominently disclose material aspects of the ESG strategies.

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”.

A fund must not include misleading statements in its sales communications about the ESG performance or ESG-related outcomes of the fund.⁵¹

Examples of such sales communications may include those that do any of the following:

• make inaccurate claims about the fund’s ESG performance or results
• make inaccurate claims about the existence of a direct causal link between the fund’s investment strategies and ESG performance or results
• manipulate elements of disclosure to present the fund’s ESG performance or results in a positive light, such as cherry-picking data.

⁵¹ See Footnote 43.

Staff understand that some IFMs may wish to include fund-level ESG ratings, scores or rankings on their websites or other sales communications. These would include, but are not limited to, fund-level ESG ratings or scores that are primarily weighted averages of the company-level ESG ratings or scores of the underlying portfolio holdings of the fund (Portfolio-Based ESG Ratings), and fund-level ESG rankings based solely on Portfolio-Based ESG Ratings (Portfolio-Based ESG Rankings).

While staff are of the view that the Portfolio-Based ESG Ratings and Portfolio-Based ESG Rankings that staff have observed to date are not “performance data” and “performance ratings or rankings” within the context of Part 15 of NI 81-102 (Part 15), other types of fund-level ESG ratings, scores and rankings that are not Portfolio-Based ESG Ratings and Portfolio-Based ESG Rankings may be considered “performance data” or “performance ratings or rankings”. Similarly, while staff are of the view that t he comparison of Portfolio-Based ESG Ratings and Portfolio-Based ESG Rankings that staff have observed to date are not comparisons of performance within the context of Part 15,⁵² the comparison of other types of fund-level ESG ratings, scores and rankings that are not Portfolio-Based ESG Ratings and Portfolio-Based ESG Rankings may be considered to be comparisons of performance.

If a type of fund-level ESG rating, score or ranking is considered “performance data” or a “performance rating or ranking”, or a comparison of that type of fund-level ESG rating, score or ranking is considered to be a comparison of performance, sales communications that include this type of fund-level ESG rating, score or ranking, or a comparison thereof, may not be able to comply with some of the provisions of Part 15 that relate to “performance data”, “performance ratings or rankings” and comparisons of performance (the Performance Requirements). Staff remind IFMs to review and consider the Performance Requirements to determine whether such sales communications are in compliance with Part 15 and encourage IFMs that wish to include other types of fund-level ESG ratings, scores and rankings in their sales communications to contact staff of their principal regulator as needed.

⁵² See, for example, subsection 15.3(1) and sections 15.7 and 15.7.1 of NI 81-102.

Any sales communication that includes fund-level ESG ratings, scores or rankings, including Portfolio-Based ESG Ratings and Portfolio-Based ESG Rankings, must not be misleading. In staff’s view, a sales communication that includes fund-level ESG ratings, scores or rankings may be misleading for a number of reasons, including any of the following:

• there are conflicts of interest involving the provider that prepares the fund-level ESG rating, score or ranking;
• the selection of the specific fund-level ESG rating, score or ranking is the result of cherry-picking fund-level ESG ratings, scores or rankings in order to present the fund’s ESG characteristics or performance in a positive light;
• the selected fund-level ESG rating, score or ranking is not representative of the ESG characteristics or performance of the fund;
• the sales communication does not include explanations, qualifications, limitations or other statements necessary or appropriate to make the inclusion of the fund-level ESG ratings, scores or rankings in the sales communication not misleading.

Guidance on how to avoid these four issues is provided below.

Staff note, however, that a sales communication that includes fund-level ESG ratings, scores or rankings may also be misleading for reasons that have not been identified in this Notice and remind IFMs to review and consider the requirements under Part 15 when preparing sales communications.

Conflicts of interest

To address conflicts of interest, staff’s view is that the fund-level ESG rating, ranking or score that is included in the sales communication should be prepared by a provider that:

(a) rates, scores or ranks the ESG characteristics or performance of the fund through an objective methodology that is (i) applied consistently to all funds rated, scored or ranked by it, and (ii) disclosed on the provider’s website;

(b) is not a member of the organization of the fund;⁵³ and

(c) is not paid to assign a fund-level ESG rating, score or ranking to the fund by the promoter, manager, portfolio adviser, principal distributor or participating dealer of any fund or any of their affiliates.

In addition, for a fund-level ESG ranking, the ranking should be based on a published category of funds, such as Canadian equity funds, that is not established or maintained by a member of the organization of the fund.

⁵³ See the definition of “member of the organization” in section 1.1 of National Instrument 81-105 Mutual Fund Sales Practices.

Selection of fund-level ESG rating, score or ranking

To help ensure that the selection of the fund-level ESG rating, score or ranking is not the result of cherry-picking, staff are of the view that the selection of the rating, score or ranking should be consistent with the following parameters:

(a) the IFM should consider whether the selected fund-level ESG rating, score or ranking is an accurate representation of the fund (and its portfolio, if the fund-level ESG rating, score or ranking is based on the fund’s portfolio) during the time period that the sales communication appears or is in use and therefore, whether the inclusion of the selected fund-level ESG rating, score or ranking in a sales communication may be misleading;

(b) for a fund-level ESG ranking, the ranking should be based on a published category of funds, such as, for example, Canadian fixed income funds, that provides a reasonable basis for evaluating the ESG characteristics or performance of the fund;

(c) if a fund-level ESG rating, score or ranking is disclosed on the website of an ESG Objective Fund, the IFM should disclose the same type of fund-level ESG rating, score or ranking from the same provider, if available, for all of the ESG Objective Funds that it manages;

(d) if a fund-level ESG rating, score or ranking is disclosed on the website of an ESG Strategy Fund, the IFM should disclose the same type of fund-level ESG rating, score or ranking from the same provider, if available, for all of the ESG Objective Funds and ESG Strategy Funds that it manages;

(e) if a fund-level ESG rating, score or ranking is disclosed on the website of an ESG Limited Consideration Fund, the IFM should disclose the same type of fund-level ESG rating, score or ranking from the same provider, if available, for all of the ESG Objective Funds, ESG Strategy Funds, and ESG Limited Consideration Funds that it manages; and

(f) if a fund-level ESG rating, score or ranking is disclosed on the website of a fund that is a Non-ESG Fund, the IFM should disclose the same type of fund-level ESG rating, score or ranking from the same provider, if available, for all of the funds that it manages.

However, staff do not view paragraph (c) as applicable to an ESG Objective Fund that has a specialized ESG focus, such as a fund focused on climate change, if the fund-level ESG rating, score or ranking that is being disclosed is specific to the specialized ESG focus of the fund, such as a rating relating to carbon emissions.

Staff note that the principles from paragraphs (c), (d), (e) and (f) would also apply to sales communications that cover more than one fund and sales communications for which different versions of the same sales communication are produced for most or all o f the IFM’s funds. An example of the latter type of sales communication is a “fund profile”, which is typically a short overview document that covers one fund. IFMs generally produce and make publicly available a fund profile document for most or all of the IFM’s funds, and each fund profile document usually uses the same format and includes the same type of content. For both type s of sales communications, staff would have concerns about cherry-picking fund-level ESG ratings, scores or rankings to present a particular fund’s ESG characteristics or performance in a positive light if the rating, score or ranking was not included in the sales communication(s) for all such applicable funds in accordance with paragraphs (c), (d), (e) and (f). For greater clarity, staff do not consider the principles from paragraphs (c), (d), (e) and (f) to be applicable to sales communications that only cover one fund and for which different versions of the same sales communication are not produced for most or all of the IFM’s funds.

In addition, staff encourage funds that wish to disclose fund-level ESG ratings, scores or rankings in their sales communications to disclose fund-level ESG ratings, scores or rankings from at least 2 different providers.

Representativeness of fund’s ESG characteristics or performance

Furthermore, for a Portfolio-Based ESG Rating, if only a certain percentage of a fund’s underlying portfolio is covered by the Portfolio-Based ESG Rating (i.e. if less than 100% of the fund’s underlying portfolio has been rated), staff’s view is that the I FM should consider whether the portion of the portfolio that has not been rated has substantially similar ESG characteristics to the rest of the portfolio and therefore, whether the Portfolio-Based ESG Rating is an accurate representation of the ESG characteristics or performance of the entire portfolio. If the portion of the portfolio that has not been rated does not have substantially similar ESG characteristics as compared to the rest of the portfolio, the Portfolio-Based ESG Rating may not be an accurate representation of the entire portfolio and therefore, the inclusion of the Portfolio-Based ESG Rating in a sales communication may be misleading.

The above guidance also applies to Portfolio-Based ESG Rankings that are based on Portfolio-Based ESG Ratings where less than 100% of the fund’s underlying portfolio has been rated.

Accompanying disclosure

Finally, to avoid being misleading, staff are of the view that a sales communication that includes fund-level ESG ratings, scores or rankings should include the following disclosure:

(a) the name of the provider that prepared the fund-level ESG rating, score or ranking;

(b) the date or time period covered by the fund-level ESG rating, score or ranking:

(i) if the fund-level ESG rating, score or ranking is as of a specific point in time, the date of the specific point in time;

(ii) if the fund-level ESG rating, score or ranking covers a time period:

(A) the period of time; and

(B) a brief explanation of how the fund-level ESG rating, score or ranking was determined for the specified time period (e.g. if the fund-level ESG rating, score or ranking is based on an average of the monthly fund-level ESG ratings, scores or rankings from the past 12 months);

(c) how often the fund-level ESG rating, score or ranking is updated by the provider (e.g. on a monthly basis);

(d) cautionary language stating that the fund’s ESG characteristics and performance may differ from time to time;

(e) for Portfolio-Based ESG Ratings, t he percentage of the fund’s underlying portfolio holdings that has been rated;

(f) for Portfolio-Based ESG Rankings, the percentage of the fund’s underlying portfolio holdings that has been rated for the purpose of the Portfolio-Based ESG Rating on which the Portfolio-Based ESG Ranking is based;

(g) for fund-level ESG ratings or scores, the range of the fund-level ESG rating or score (e.g. AAA to CCC);

…continues to items (h) to (q)

…continued from items (a) to (g)…

Accompanying disclosure

Finally, to avoid being misleading, staff are of the view that a sales communication that includes fund-level ESG ratings, scores or rankings should include the following disclosure:

(h) for fund-level ESG rankings:

(i) the classification of the peer group used for the ranking (e.g. Canadian equity);

(ii) the number of funds in the peer group; and

(iii) the fund-level ESG rating or score of the fund that was used to determine the fund’s fund-level ESG ranking;

(i) if the fund is not an ESG Objective Fund, cautionary language that states that the fund does not have ESG-related investment objectives;

(j) if applicable, cautionary language that states that the fund-level ESG rating or score (or in the case of a fund-level ESG ranking, the fund-level ESG rating or score on which the ranking is based) does not evaluate the ESG-related investment objectives of, or any ESG strategies used by, the fund and is not indicative of how well ESG factors are integrated by the fund;

(k) a one-or two-sentence summary explaining what the fund-level ESG rating , score , or ranking measures or assesses , including:

(i) for a fund-level ESG ranking, language identifying the fund-level ESG rating or score that the ranking is based on ;

(ii) for a Portfolio-Based ESG Rating or Portfolio-Based ESG Ranking, language that states that the fund-level ESG rating or score (or in the case of a fund-level ESG ranking, the fund-level ESG rating or score on which the ranking is based) is a weighted average ESG rating or score of the company-level ESG ratings or scores of the underlying portfolio holdings of the fund ; and

(iii) for a fund-level ESG rating , score or ranking that is not a Portfolio-Based ESG Rating or Portfolio-Based ESG Ranking , an explanation of what the fund-level ESG rating or score (or in the case of a fund-level ESG ranking, the fund-level ESG rating or score on which the ranking is based) measures or assesses;

(l) if the sales communication is online, a link to the full methodology of the fund-level ESG rating or score (or in the case of a fund-level ESG ranking, the fund-level ESG rating or score on which the ranking is based);

(m) if the sales communication is not an online sales communication, language explaining how to easily access, free of charge, the full methodology of the fund-level ESG rating or score (or in the case of a fund-level ESG ranking, the fund-level ESG rating or score on which the ranking is based);

(n) if applicable, a statement indicating that other providers may also prepare fund-level ESG ratings or scores (or in the case of fund-level ESG rankings, the fund-level ESG ratings or scores on which the rankings are based) using their own methodologies, which may differ from the methodology used by the provider;

(o) if the sales communication is online, a link to the fund’s website containing the same type of fund-level ESG ratings , scores or rankings for the fund on the same periodic basis as updated by the provider over the past 12 months;

(p) if the sales communication is not an online sales communication, language explaining how to easily access, free of charge, the same type of fund-level ESG ratings , scores or rankings for the fund on the same periodic basis as updated by the provider over the past 12 months; and

(q) a cross-reference to the fund’s prospectus for further information about the fund’s investment objectives and strategies.

In addition, staff encourage funds to disclose separate fund-level ratings, scores or rankings, as applicable, for each of the three components of ESG.

The above accompanying disclosure should be clear and not buried within fine print.

Staff note that while the above list of accompanying disclosure has been provided to assist IFMs in the preparation of sales communications for their funds, the list is non-exhaustive and a sales communication that includes fund-level ESG ratings, scores or rankings and the above accompanying disclosure may still be misleading for other reasons.