In Fund Directions, asset management partner Paulita Pike discussed new guidelines from the SEC that would define sustainable investment strategies for funds. The anticipated rules would require advisers to use a set of standardized forms and disclosure mechanisms and aim to give investors a clear picture of what they’re getting by preventing the use of ambiguous sustainability terms.
According to Paulita, even without firm guidelines, most advisors and the boards of registered-fund companies have already made efforts to “keep their funds out of trouble.”
“Boards have a good understanding about ESG funds and how they are defined. They understand how ESG proves out in the investment process, whether an advisor uses third-party metrics or has their own development for incentives that tie into proxy voting. They are quite attentive to the topic.”
The SEC will vote on whether to propose the new set of rules on May 25.
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