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ADISA Comments on SEC Notice of Proposed Rulemaking Titled "Enhanced Disclosures by Certain Investment Advisors and Investment Companies about ESG Investment Practices"

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ADISA submitted comments to the SEC this week regarding how ESG issues are used in investment advisors’ and investment companies’ decision-making processes. However, ADISA believes the proposed rule as written is ambiguous and likely would result in confusing information that unintentionally misleads investors, and recommends several changes that will strengthen the SEC’s stated objective to “create a framework for disclosures about a fund or advisor’s ESG-related strategies” ensuring that the requested information is truly useful to investors, while not creating such a burdensome requirement that companies are discouraged from employing ESG criteria in their investment strategies.

The changes ADISA recommends include:

  1. The SEC Should Clarify Applicability of the Proposed Rule Only to Those That Consider One of More ESG Factors.
  2. The SEC Should Codify Informal Assurances in the Preamble.
  3. The SEC Should Define the Terms “Environmental,” “Social,” and “Governance.”
  4. The SEC Should Not Require All Funds to Disclose GHG Emissions.

The comment letter was drafted by ADISA’s Government Relations firm HillStaffer and signed by the Legislative & Regulatory Committee Co-Chairs Catherine Bowman, The Bowman Law Firm, and John H. Grady, ABR Dynamic Funds.

You can read the letter in its entirety here.