ESG Fund Labels Attract More SEC Scrutiny in Greenwashing Fight

The SEC is giving funds with names that promote environmental, social and governance investing a thorough examination to root out greenwashing and other misleading ESG claims, an agency official said.

ESG funds can expect the Securities and Exchange Commission to ask whether most of their assets align with labels as part of the agency’s disclosure review process, Michael Spratt, an assistant director in the Division of Investment Management, said Thursday.

Funds generally must invest 80% of their assets in investments that correlate with their names, under current SEC regulations.

“Say what you do and do what you say,” Spratt said ...