The US Securities and Exchange Commission (SEC) has challenged the ESG credentials of specific funds, as part of the regulatory body's counteraction against greenwashing among managers.
As initially reported in the Financial Times, the SEC has issued subpoenas to an unidentified range of asset management firms, with a focus on conventional investment funds that have rebranded themselves as ESG-compliant in a potentially deceptive manner.
While no US asset managers have incurred fines related to greenwashing so far this year, in 2022, Goldman Sachs and BNY Mellon were fined $4 million and $1.5 million, respectively. This year, the German asset management firm DWS has set aside $21 million in anticipation of the fine it will face due to previous extensive greenwashing activities.
In April of this year, the SEC launched the Climate and ESG Task Force to uncover ESG-related misconduct.
Hester Peirce, a commissioner at the SEC, stated: "This concern about greenwashing is genuine because advisers can profit by labelling their products and services as 'green' without undertaking anything exceptional to substantiate that designation.
"Yet, while enforcement actions of this nature underscore the problem, they also demonstrate that we already possess a solution: when we encounter advisers who do not accurately depict their ESG practices, we can enforce the existing laws and regulations."
The SEC has also outlined rules for corporate climate risk disclosure. However, publication has experienced repeated delays, moving from December 2022 to April of this year, and now set to be released in the autumn.
In Australia, asset manager Vanguard has incurred fines following a series of upheld allegations of greenwashing, most recently related to misleading investors regarding the implementation of ESG exclusionary screens in certain ETFs.
