Funds’ ESG Claims Clash With Actual Practices, SEC Examiners Say

Asset managers are mischaracterizing their consideration of environmental, social, and governance factors when selling funds to investors, SEC inspectors said Monday.

The Securities and Exchange Commission has found that some funds consider ESG in their investment decisions differently than described in their sales literature, the agency’s Division of Examinations said in a risk alert. The SEC didn’t name the funds it reviewed.

The alert “may assist investment companies and their advisers in their compliance efforts, including review of their compliance practices, policies, and procedures,” SEC examiners said in the notice. The alert said inspectors also found weaknesses with funds’ ...