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SEC Proposal Tackles Greenwashing

By May 26, 2022No Comments

SEC unveils rules to prevent misleading claims and enhance disclosures by ESG funds

Key Points

  • The SEC on Wednesday proposed two rule changes that would prevent misleading or deceptive claims by U.S. funds on their environmental, social and corporate governance (ESG) qualifications and increase disclosure requirements for those funds.
  • The proposals, which are subject to public feedback, come amid mounting concerns that some funds seeking to profit from the rise in ESG investing practices have misled shareholders over what’s in their holdings, a practice known as greenwashing.
  • The proposals to tackle greenwashing come after the SEC in March debuted broad rules that would require publicly traded companies to disclose how climate change risks affect their business.