This alert updates a memorandum we published in October 2021 on Environmental, Social, Governance (“ESG”) funds.[i] In that memorandum, we discussed the prevalence of investment companies that claim in their disclosures and marketing materials to further ESG goals, the inherent ambiguity of broadly purporting to further ESG goals, given the sheer breadth of the divergent issues encompassed by the acronym, and the Security and Exchange Commission’s (“SEC”) newly-prioritized focus on ensuring that ESG disclosures are not misleading.[ii] Specifically, we noted that there were two ways that the SEC might achieve its goal: (1) by regulating how companies may use the term “ESG” in fund names and marketing materials, and/or (2) by providing additional disclosure guidance through rulemaking.[iii] As we predicted, this week on Wednesday the SEC announced that it was going to do both, proposing new ESG naming[iv] and disclosure requirements.[v]
In a proposal addressing investment company and fund names, the SEC would expand the “Names Rule” (Rule 35d-1 under the Investment Company Act of 1940). The Names Rule currently requires funds with a name suggesting a focus on a particular type of investment (e.g. “domestic stock fund” or “international bond fund”) to invest at least 80% of its assets accordingly. The proposal would expand the Names Rule to apply to fund names with terms indicating that the fund’s investment decisions incorporate one or more ESG factors (e.g. “socially...
A senior Iranian official has slammed the United Arab Emirates for being an aggressor, not merely a supporter of aggression, stating that the UAE cannot hide its aggressive nature and role behind ...