As discussed in the 2022 Notice, staff originally conducted reviews of the regulatory disclosure documents and sales communications of ESG-Related Funds and other funds that marketed themselves as ESG-Related Funds in 2020 and 2021 (the 2020-2021 ESG-Focused Reviews). The findings from those reviews informed the guidance set out in the 2022 Notice.
After the publication of the 2022 Notice, staff conducted the ESG-Focused Reviews, which covered a selection of ESG-Related Funds in 2022 and 2023. Staff reviewed the following:
- prospectuses and related offering documents such as annual information forms (each, an AIF) and fund facts documents (each, a Fund Facts) or ETF facts documents (each, an ETF Facts), with a focus on the fund’s name, investment objectives, fund type, investment strategies disclosure, summary of proxy voting policies and procedures, risk disclosure, and suitability disclosure.
- continuous disclosure, including management reports of fund performance (each, an MRFP).
- portfolio holdings,
- past ESG-related proxy votes, and
- sales communications.
The purpose of the ESG-Focused Reviews was to:
- assess whether the disclosure and sales communications of ESG-Related Funds were consistent with the guidance set out in the 2022 Notice.
- where staff identified issues, work with IFMs to correct such disclosure and sales communications in order to address potential greenwashing concerns; and
- determine whether further policy work is needed to improve the disclosure and sales communications of ESG-Related Funds in order to further reduce the potential for greenwashing.
Staff conducted:
- 112 ESG-focused reviews of the prospectuses, related offering documents, and sales communications of ESG-Related Funds as part of the regular prospectus review process (the ESG Prospectus Reviews), covering 57 IFMs;
- 39 ESG-focused reviews of the continuous disclosure, portfolio holdings, past ESG-related proxy votes, and sales communications of ESG-Related Funds as part of the continuous disclosure review process (the ESG CD Reviews), involving 35 IFMs and 50 funds;
- separate sales communication reviews on an as-needed basis, involving six IFMs.
In addition, staff also reviewed the disclosure documents and sales communications of three funds that seek exposure to carbo n credits or allowances, including through futures, two crypto asset funds that offset their carbon footprint or that are “carbon negative” as compared to their carbon footprint, and two crypto asset funds that have a carbon offset series (collectively, the Carbon-Related Funds). Staff’s reviews of Carbon-Related Funds involved five IFMs and were focused on identifying and addressing potential greenwashing issues arising from such funds. Specifically, while carbon credits and carbon offsetting are generally perceived to be related to environmental sustainability, not all Carbon-Related Funds consider ESG factors as part of their investment process. As a result, the manner in which Carbon-Related Funds are marketed could potentially raise greenwashing concerns.3
3 See the guidance below on funds that primarily invest in an ESG-related asset class but that do not consider ESG factors under “Are ESG factors considered as part of the fund’s investment process?”