Compliance Briefing — SEC examiners spotlight ESG disclosure controls
The SEC Division of Examinations warned investment advisers and funds about inconsistencies between ESG marketing claims and portfolio practices, outlining focus areas for upcoming reviews and disclosure controls.
On 9 April 2021 the U.S. Securities and Exchange Commission’s Division of Examinations issued an ESG Risk Alert detailing common deficiencies observed in environmental, social, and governance strategies. Examiners flagged misleading claims about ESG integration, inadequate compliance programs, weak controls over proxy voting, and insufficient documentation supporting ESG evaluations.
Compliance officers should reconcile marketing narratives with investment processes, refresh policies for ESG data governance and proxy oversight, and prepare evidence packages for upcoming examinations.
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