• Summit Strategy Group

ESG Weekly News Update: May 21, 2021


Bernese Alps in Grindelwald, Switzerland


General ESG News


ESG Today: IEA: Energy Investment Surge to Nearly $5 Trillion Needed to Reach Net Zero by 2050

  • The International Energy Agency (IEA) released Net Zero by 2050: A Roadmap for the Global Energy Sector, which argues that a net zero pathway exists but requires a massive global mobilization of trillions of dollars.

  • The roadmap requires an immediate end to fossil fuel investments and no new sales of internal combustion engine passenger vehicles by 2035, along with more than 400 other milestones.

  • The roadmap also requires total annual investments to reach nearly $5 trillion by 2030, and major developments will need to be made in the renewable energy sector (calling for annual additions of solar PV to reach 630 GW by 2030).


Investment Week: Danger of being corrupted? ESG ratings increase risks of greenwashing

  • The lack of a generally accepted standard for ESG leaves room for existing standards to be “corrupted,” especially in the areas of finance and investing.

  • There are no laws governing what constitutes a green bond or ESG-compliant funds (though there is some regulation), and many current ESG ratings are not based on company financials (with the exception of credit ratings, which can be costly).

  • The U.S. is lagging behind the EU’s comprehensive Sustainable Finance Disclosure Regulation; the European Securities and Markets Authority recommends a regulatory regime to tackle greenwashing risks and product mis-selling.

JD Supra: ESG Board Committees, Part I: Five Considerations Before Adopting An ESG Board Committee

  • The author makes a case for five elements a company should consider before creating an ESG board committee:

  • Identifying ESG team players

  • Understanding ESG data

  • Identifying ESG materiality

  • Considering litigation and political strategies

  • Understanding the ESG communities’ expectations

JD Supra: ESG Board Committees, Part II: Five Steps to Achieve An Effective ESG Board Committee

  • The author argues that there are five key components to focus a board’s attention on ESG issues:

  • Treating the ESG committee like other board committees

  • Being deliberate with ESG board composition

  • Focusing in material risks and opportunities

  • Considering the ESG committee’s reporting structure

  • Being thoughtful in creating a consistent corporate record

Think Advisor: Millennials Are Buying, Investing Based on ‘Social Good’: Fidelity

  • Although millennials currently only control 5% of the wealth in the U.S., it is expected that their approaches to charitable giving will revolutionize the social sector as they inherit wealth from the previous generation.

  • Nearly three-quarters of millennials describe themselves as philanthropists, and nearly half are optimistic about solving global challenges (compared to just 22% of the previous generation).

  • The events of 2020 have caused a shift in donor priorities, with a new focus on hunger, economic development, and racial inequity; new donors are more comfortable with and reliant on virtual donation tools, and they see the social sector as a trusted institution for addressing the needs of their communities.

GreenBiz: ESG is rewriting the job description for CSOs

  • Weinreb Group’s new report “The Chief Sustainability Officer 10 Years Later: The Rise of ESG in the C-Suite” takes an in-depth look at the role of CSOs today (ten years after their initial report). Key trends noted in the report include:

  • There are now more CSOs who have more influence

  • There are now more women, but there is little racial diversity

  • There are larger, more dispersed teams and embedded functions

The Guardian: Third of global food production at risk from climate crisis

  • Researchers have found that about 95% of current crop production takes place in areas they define as “safe climatic space,” but if temperatures rise by 3.7 degrees Celsius by the end of the century, this safe space will decrease significantly, threatening about a third of the global food supply.

  • If the temperature rise is limited to 1.5 or 2 degrees Celsius, experts predict that only 5-8% of the global food supply will be at risk.

  • It is worth noting that temperature increases can also make some areas previously too cold for food production into more productive areas, but it would not be enough to offset losses.

The Hill: Let's put the 's' in ESG

  • Climate change has been the major driver in the recent explosion of sustainable investing, especially because the metrics are easy to quantify, but social (and governance) factors should not be overlooked in new, standardized frameworks.

  • One area of concern is the recent “shecession” — as women have been the hardest hit by the recent economic recession, and unemployment skyrocketed during the coronavirus pandemic (and has yet to recover).

  • Companies can take actions to help women return to work and communicate these measures to investors using things like hiring data, implementing new work schedules, and documenting measurable progress toward reversing the workplace trends of the past year.

JD Supra: Six Strategies for Building the E in ESG

  • As with most issues related to ESG, and as the link between environmental progress and business value and resilience becomes more clear, good governance is the key to success in managing environmental risk. Six strategies for integrating the ‘E’ into ESG strategy include:

  • Reviewing and embedding new policies

  • Optimizing operations

  • Being proactive with data

  • Enhancing board education

  • Driving new business strategy

  • Engaging and communicating with stakeholders

Triple Pundit: The Pace of Change Around ESG May be Changing, But Your Path Shouldn’t

  • Though the ESG regulatory landscape is likely to change in the near future, companies should not wait for federally mandated disclosures before reporting on ESG initiatives; ESG is about creating sustainable businesses, not box-ticking.

  • Key actions businesses should take to address rising ESG expectations include understanding climate risks and aligning ESG efforts with overall business strategies, establishing baseline metrics and an emissions reduction target, and assigning oversight responsibility.


Forbes: Evaluating Climate Risk As Business Risk

  • Today we have employees, customers and investors pushing for companies to reduce their carbon footprints and demonstrate commitment to sustainable practices. Responsible business leaders want their organizations to be good corporate citizens for at least two good reasons: because it’s the right thing to do, and because they want to attract high-performing talent, new clients and capital.

  • The rise of ESG investing is proof positive and has an immediate impact on a company’s ability to access capital. That is why you’ll find your board more receptive to these topics than a decade ago; directors understand that reputational risks are business risks.

  • A good “climate risk” mitigation plan will help you protect your company’s reputation; a great plan will help you build a better business.


Pharmaceutical Technology: Environmental factors most important among ESG: Poll

  • In a poll Verdict has conducted to assess which among the three ESG factors is most important as ranked by companies, a majority 45% voted environmental factors to be the most important, while 37% voted corporate governance and 18% voted social factors to be the most important.

  • Social factors were the second most important, according to 56% of the respondents, followed by corporate governance (23%) and environmental factors (21%).

  • The three ESG factors are usually interlinked, and equally drive sustainable performance of a company or business although at varying degrees. Investors are employing these non-monetary factors in their search for potential growth opportunities and material risks.


Aerospace Technology: Accountability of environmental, social, and governance (ESG) issues should lie with senior executives: Poll

  • To ensure that ESG goals are met and prioritized, companies should ensure careful integration of ESG policies and practices into their corporate policies. The roles and responsibilities of achieving ESG goals should be part of a governance model and clearly communicated across board members and senior management.

  • Investors and asset managers are calling for holding board members and senior executives accountable for the management of ESG issues. BlackRock, SSGA, and Vanguard are some of the asset managers who have highlighted the need for board accountability in ESG management.

  • One way to ensure accountability from senior executives is to link compensation with ESG metrics. Mastercard, for example, linked bonuses received by senior executives to ESG initiatives such as carbon usage and gender pay parity.


ESG Disclosures, Standards, Rankings, and Reporting


ESG Today: IFRS Proposes Expanding its Objectives to Include Development of Sustainability Standards

  • The IFRS has proposed expanding its constitution to include developing sustainability standards in its objectives, and to establish and outline the structure of an International Sustainability Standards Board (ISSB)

  • This proposal comes after the IFRS released a paper in October 2020 seeking input on the formation of the ISSB and received positive feedback.

ESG Today: BNPP AM, CDP, Partner to Develop Biodiversity Reporting Metrics

  • Biodiversity is emerging as a key sustainability focus area, and the new agreement between BNPP and CDP will aim to develop a comprehensive biodiversity reporting framework.

  • The companies aim to incentivize companies to reduce biodiversity loss from business practices.

ESG Today: CFA Institute Publishes Initial Version of New ESG Disclosure Standards for Investment Products

  • As large amounts of capital move toward sustainable investments and ESG-themed products proliferate, CFA Institute has released new ESG standards for investment managers, including disclosure requirements and recommendations.

  • The standards are designed to be applied regardless of how investment products are named, labelled, or categorized.

Reuters: U.S. SEC chair planning new workforce data disclosures for public companies

  • SEC chair Gary Gensler announced that the agency plans to propose a rule requiring public companies to disclose a range of workforce / human capital data. The SEC is also planning a new climate change disclosure rule.

  • While the SEC has made clear it’s prioritization of the environmental pillar of ESG, experts urge the agency not to neglect social and governance concerns, since investors need this information as well.


National Law Review: SEC to Move Quickly on Proposed ESG Disclosures

  • The Securities and Exchange Commission (SEC or the Commission) has announced a series of initiatives reorienting the Commission’s agenda to focus on environmental, social, and governance (ESG) issues. In particular, the Commission is gearing up to develop a framework to address ESG disclosures, including climate change risk and diversity and inclusion metrics.

  • Allison Herren Lee announced the publication of a request for public comment on climate-related risk disclosure rules.2 Moreover, she reiterated her February 2021 directive that the Commission staff will update the SEC’s 2010 climate change guidance and evaluate public companies’ compliance with the 2010 climate change guidance.3 In addition to these developments, she stated that the Commission will consider issuing guidance regarding human capital disclosures as well as guidance or a rulemaking regarding board diversity.

  • Commissioner Lee also stated that the SEC is considering whether to create a “dedicated standard setter for ESG,” praising the International Organization of Securities Commission’s establishment of the Sustainability Standards Board. Notably, John Coates, the Acting Director of the Commission’s Division of Corporation Finance, has said that the SEC should be “playing a leading role in the development of a baseline global framework” but cautioned that a single global standard “raises a number of considerations.”

  • There has been some divide. Commissioner Peirce stated that “[t]o get to broad ESG disclosure mandates for issuers, we have to reimagine materiality. But reimagining materiality is the same as tossing it in favor of a more malleable new edition. Materiality has served us well, and undermining it to accommodate ESG will harm investors.”


Investment Trends


The Asset: Asset managers must drive ESG transparency

  • Both Singapore and Japan have made commitments to dedicate funds to asset managers committed to green finance activities, and Asian regulators may be looking to the EU’s SFDR as a blueprint for building sustainable finance standards.

  • It is expected that there will be more pressure to issue directives around ESG investments when ESG funds permeate into the retail space, though some business leaders believe it is the responsibility of asset managers to drive ESG transparency for clients.

  • A recent survey indicates that Asia-Pacific now leads North America in incorporating climate change concerns into investment approaches (with two-thirds of investors reflecting this shift in thinking), and Europe is still ahead of both regions.

ESG Today: Amundi Transitions Series of Fixed Income ETFs to ESG Funds

  • Amundi is transitioning six of its fixed income ETFs into ESG funds, offering both investment grade and high yield corporate exposures, as well as some floating rate notes.

ESG Today: BlackRock’s iShares Launches ETF Tracking New DAX ESG Target Index

  • Qontigo launched the DAX ESG Target Index, meant to reflect the return characteristics of the original DAX Index while incorporating ESG screens and scores and reducing carbon intensity by at least 30%.

NAPA: Could ESG Options Boost 401(k) Participation?

  • A recent survey shows that 90% of DC plan participants who knew about their plan’s ESG options invested in those funds, but just 37% were offered ESG-related funds.

  • Of those whose plans did not offer ESG investments, about two-thirds of respondents said they might increase their overall contribution if ESG options were offered.

  • Fewer than 3% of plan sponsor respondents even offered ESG investment options.

Chief Investment Officer: Diversity, Inclusion, ESG Are Key Focuses for Headhunters Seeking CIOs

  • The COVID-19 pandemic and the social upheaval over racial injustice in 2020 have been the two biggest factors affecting CIO headhunter searches.

  • Diversity and inclusion has become the main priority for all clients, and sustainability perspectives on all asset classes are also a major factor.


PlanSponsor: Plans With ESG Options See Larger Contribution Rates

  • The “2021 U.S. Retirement Survey,” conducted in late January among 1,000 U.S. consumers ages 45 to 75 and 230 workers with employer-sponsored defined contribution (DC) plans, reported that of those participants who were aware that their plan had ESG options, nine out of 10 said they invest in them.

  • Of those who said their DC plan did not offer ESG investment options or did not know, 69% said they would or might increase their overall contribution rate if they were offered ESG options. Only 31% said they would not.

  • As interest in sustainability practices rapidly increases, workers in different age demographics are demanding access to ESG options in their plan’s lineup. The most common supporters of ESG investments are Generation X and Millennial employees, says Sarah Bratton Hughes, head of sustainability, North America at Schroders.


Visual Capitalist: Fact Check: The Truth Behind Five ESG Myths

  • In the first quarter of 2021, global ESG fund inflows outpaced the last four consecutive quarters, reaching $2 trillion. But while ESG gains rapid momentum, the CFA Institute shows that 33% of professional investors surveyed feel they have insufficient knowledge for considering ESG issues.

  • Global ESG assets under management (AUM) in ETFs have grown from $6 billion in 2015 to $150 billion in 2020. In just five years, ESG AUM have accelerated 25 times.

  • Over 1,500 shareholder resolutions focused on ESG-related matters were filed between 2018-2020. Not only are investors turning to ESG assets, but they are placing higher demands on corporate responsibility.

  • Although ESG is popular among millennials, ESG investing is being driven by the entire investor population. In 2019, one study finds that 85% of the general population expressed interest in ESG investing.

  • Over 3,000 signatories have committed to the UN Principles of Responsible Investment. As of the first quarter of 2021, 313 global organizations and 33 asset owners have been newly added.


Chief Investment Officer: Milton Friedman, Ha! ESG Sentiment Won’t Ruin Companies Long Term

  • ESG investing is the best approach to ensuring that corporations thrive in the future, and now, too. Companies that blight the environment, mistreat, and discriminate against employees and others, and run their businesses in a high-handed manner will not be winners in the fullness of time.

  • ESG-oriented stocks did better during the pandemic-induced stock plunge of last spring than the broader market, noted Linda-Eling Lee, head of ESG research at MSCI.

  • CIO Ailman made the case for not simply divesting stock in companies that have problematic ESG records. Rather, he contended, the better course is to stay invested and seek to influence them with the leverage that comes with being a major shareholder.


Companies and Industries

Commercial Observer: Commercial Real Estate Emphasizing ESG Scores More Than Ever

  • For commercial real estate, the new focus on ESG scores means both investing in and renting to top-performing companies, especially based on the environmental pillar.

  • Commercial real estate has historically been one of the sectors most engaged in ESG, largely due to the industry’s physical impact on the world, and because many experts correlate ESG performance with financial performance and risk.

  • A recent survey shows that a third of institutional investors who aren’t currently using ESG measures in decisions plan to do so in the near future, and more than 40% already are.

  • A foundational action for the increasing focus on ESG in the sector was the formation of the Global Real Estate Sustainability Benchmark (GRESB), the “leading ESG benchmark for real estate and infrastructure investments across the world.”

Natural Gas Intelligence: North Dakota Governor Sets Carbon-Neutral Goal by 2030

  • Governor Burgum announced at the Williston Basin Petroleum Conference in Bismarck the state’s carbon-neutral goal and urged oil and gas representatives to support it.

  • Burgum stated that North Dakota is pursuing enhanced oil recovery, reducing carbon dioxide emissions, salt caverns, hydrogen storage, and plastics manufacturing using excess/flared natural gas.

  • Burgum argues that carbon capture and storage is the state’s greatest opportunity, and that the greatest challenge to becoming carbon neutral is driving investment and consumer demand for products with low carbon footprints.

The Business Desk: The transition of financial services to ESG and green finance

  • ESG practices have grown in importance over the past year, and investment behavior is supporting the trend of “green and ethical finance.” Financial services and FinTech firms are taking notice, making their own ESG progress, and offering products to meet consumer demand.

  • There is also a shift in consumer behavior toward choosing more sustainable/ethical financial providers, as well as toward more digital financial service brands.

  • It is expected that financial service providers will increase their options for consumers to invest while having a positive societal impact.

Yahoo! Finance: Arabesque S-Ray Partners with Seneca ESG to Deliver Best-in-class Climate & ESG Data Analytics and Workflow Automation Tools for Investment Firms

  • Seneca ESG will integrate Arabesque S-Ray’s temperature scores and emissions data into its ZENO platform, giving users immediate access to climate data to build scenario analyses.

  • Adjustable platform parameters include indicator weightings, materiality, degrees Celsius change, optimistic/pessimistic cases, and more.

Next City: How to Start (and Run) a Bank That Puts People and Planet Over Profits

  • New Resource Bank was founded with the sole purpose of being the first depository institution in the U.S. to specialize in environmental sustainability lending.

  • Its founders saw potential for growth in areas like solar and wind energy, but these companies didn’t need venture capital, where much of sustainable financing was concentrated in the early 2000s. After substantial scrutiny, the FDIC accepted the bank’s proposal (which included profiles of more than 200 potential customers) to become a sustainable lending institution.

  • New Resource Bank received a cease & desist order in 2009 due to suspicion that it was engaged in unsafe or unsound banking practices; to resolve this, the bank had to ensure every loan it made was mission-aligned.

  • This process allowed the bank to get ahead of the consumer demand curve and truly understand the risks associated with lending to sectors like organic foods and solar energy; this sets it apart from many banks that do not branch out from established lending areas to understand new industries.

  • The example of New Resource Bank shows that banks can still be profitable even when putting people and planet before profits.

The Triple Pundit: Going Beyond Net-Zero Goals, Autodesk Deploys Technology to Help Build a Mores Sustainable World

  • Autodesk has been working with cloud providers to make sure they are purchasing 100% renewable energy, and it has been engaging its suppliers to increase their environmental disclosures.

  • The company is also using its products like AI, cloud collaboration, 3D modeling, and virtual reality to improve customer sustainability across any industry.

  • Autodesk is currently working with the architecture and construction industry to create sustainable solutions, as construction and demolition waste currently comprise about 40% of the total U.S. waste stream. The company is also working to tackle water infrastructure innovation.

ESG Today: IHS Markit to Provide ESG Reporting Platform to TSX-Listed Companies

  • IHS Markit is partnering with the Toronto Stock Exchange to provide issuers listed on the exchanges with its ESG Reporting Repository platform at no cost.

  • The platform allows users to upload and compare ESG data and manage reporting obligations.

ESG Today: Amazon, Fidelity, Invest in Zero Emissions Aviation Company BETA

  • BETA’s private financing, including from Amazon’s Climate Pledge Fund, will fund the development of its electric aviation ecosystem (EVA).

  • The company is currently developing an Electric Vertical Take-Off and Landing (eVTOL) aircraft, expected to produce zero operational emissions while carrying up to six people.

  • New partnerships for BETA include agreements with the United States Air Force and UPS.

ESG Today: Seneca ESG Integrates Arabesque S-Ray Data Into Investment Management ESG Platform

  • Arabesque S-Ray and Seneca ESG have partnered to integrate Arabesque S-Ray’s temperature scores and emissions data into Seneca ESG’s ZENO platform for investment managers.

  • The companies also have plans for future sustainability data collaboration.

ESG Today: Ceres, IIGCC Launch Natural Climate Solutions Engagement Tool For Investors

  • Ceres and the Institutional Investors Group on Climate Change (IIGCC) have released The Role of Natural Climate Solutions in Corporate Climate Commitments: A Brief for Investors.

  • The tool focuses on natural carbon offset projects like reforestation and guides company usage of such strategies, including an analysis of the associated risks and opportunities.

ESG Today: Deutsche Bank Pulls Forward Sustainable Finance Goal as Market Accelerates

  • Deutsche Bank aims to move €200 billion in sustainable finance and investments by the end of 2023 (two years ahead of its initial goal) and it has set other ESG-related targets. It has tied executive compensation to its performance toward these targets.

  • Other goals include implementing an ESG advisory concept across Germany, increasing representation of women in upper-level positions, growing its investment bank’s market share of ESG bonds and loans, and more.

  • The bank also published a Sustainable Finance Framework with rules for classifying sustainable products.

ESG Today: HSBC Launches $100 Million Climate Finance Initiative

  • HSBC has launched a Climate Solutions Partnership with WWF and World Resource Institute (WRI) to bring emerging climate solutions to commercial scale.

  • The project will support HSBC’s climate goals, including facilitating between $750 billion and $1 trillion of finance and investment by 2030.

  • The partnership will focus on three main areas: start-up firms developing carbon-cutting technologies, projects that protect and restore biodiversity, and initiatives to help transition energy growth to renewables in Asia.

Yahoo! Finance: New Forced Labour Indicators tool from Sedex empowers businesses to tackle forced labour risks in supply chains

  • Forced labor is often difficult to detect, but the Sedex Forced Labour Indicators tool uses data from sites in members' supply chains (gathered from audits) to identify operational indicators of forced labor.

  • These indicators, defined by the International Labour Organization, include things like retention of identity documents, excessive overtime, deception and restriction of movement.

  • The tool uses the indicators to calculate a risk score out of 10 and can help businesses understand their risk level within specific countries and sectors.

GreenBiz: Amazon issues its first sustainability bond at $1 billion

  • Amazon’s first $1 billion sustainability bond will be used to fund existing and new sustainability projects, such as renewable energy, clean transportation, green buildings, and affordable housing.

  • This bond is part of the $18.5 billion of debt that Amazon recently issued, and it comes at a time when many other large corporations, including Alphabet, Tesco, and PepsiCo, are making similar issuances.


Yahoo Finance: Northern Trust Asset Management Introduces ESG Vector Score

  • Northern Trust Asset Management (NTAM) introduced today the Northern Trust ESG Vector Score, a measurement that assesses publicly traded companies in the context of financially relevant environmental, social and governance (ESG) related criteria that could impact their operating performance. It can be used in constructing and managing investment portfolios and stewardship activities.

  • The ESG Vector Score focuses on the magnitude and direction of key ESG related business issues likely to have a financial impact on companies and hence a portfolio’s performance. It provides a consistent, transparent methodology to gain greater clarity when building and managing sustainable portfolios.

  • “The Score aligns with the firm’s philosophy that investors should be compensated for the risks they take – in all market environments and any investment strategy. We consider this an essential tool to measure how a company is managing its ESG business risks," NTAM president Shundrawn Thomas said.

  • NTAM’s industry-first approach marries two leading sustainability disclosure standards and frameworks – the Sustainability Accounting Standards Board’s (SASB) Standards, which are industry-specific sustainability disclosure standards focused on financial materiality, and the thematic structure of the Task Force on Climate-related Financial Disclosures’ (TCFD) Recommendations. The design enables more purposeful and transparent integration of ESG considerations into investment processes, addressing the need for a consistent way to measure and report on ESG investments.


Government Policy


FTSE Russell: A deeper dive into China's ESG

  • China has announced its goal to become carbon neutral by 2060, reflecting a broader commitment to ESG and sustainable investing. The country will also be enforcing rigorous disclosure standards as a joint effort between regulators, corporations, and financial service providers.

  • China’s growth has been different from Europe and North America, as has its ESG trajectory. For example, environmental concerns have been at the forefront of the country’s ESG agenda, while international investors emphasize strong governance practices.

  • China’s policymakers are actively issuing new ESG guidelines, and experts predict that ESG reporting will become compulsory for many Chinese companies in the near future.

  • China’s impact on the global economy means the country’s stance on ESG standards and sustainable investing cannot be ignored.


NAPA: ESG, Climate Disclosure Bills Approved by House Committee

  • The committee on May 12 approved an amended version of the Climate Risk Disclosure Act (H.R. 2570) on a party-line vote of 28-24. The legislation will now move to the House of Representatives for consideration.

  • Introduced by Rep. Sean Casten (D-IL), the bill would require public companies to disclose in their annual reports information relating to the financial and business risks associated with climate change as a way to help investors assess those risk. “By increasing market transparency, this bill will empower investors to appropriately assess climate-related risks and accelerate the market transition from fossil fuels to cleaner and more sustainable energy sources that mitigate climate change,” Casten notes in a summary of the bill.

  • Meanwhile, notwithstanding these legislative efforts, the SEC is proceeding with its own regulatory review about whether current disclosures adequately inform investors. The SEC issued a set of questions in March requesting feedback about how the Commission can best regulate and guide climate change disclosures, and what information related to climate risks can be quantified and measured.


National Law Review: Focus on ESG Will Continue to Grow Under Biden Administration

  • In the U.S., where there is no dedicated ESG-related regulatory structure in place, investor demand for ESG-focused strategies is driving fund managers to provide additional resources in the area. In addition, the Biden administration’s early focus on the environment will likely lead to greater scrutiny by the SEC. The SEC’s Division of Examinations is prioritizing exams of ESG-focused strategies, and will use the U.S.’s existing regulatory framework to review ESG-related disclosures.

  • In the coming year, the SEC will likely be increasingly focused on whether asset managers have adequate policies in place to support disclosures regarding ESG strategies and performance.

  • Fund managers should seek to avoid “greenwashing” – the practice of taking credit for an environmental impact that may not be warranted – as the SEC could view this as having implications under the anti-fraud rules. To stay in compliance, fund managers should continue to build robust ESG focused policies that support disclosures regarding ESG strategies and processes.