FACT SHEET

ESG Disclosures for 

Investment Advisers

and Investment 

Companies

U.S. SECURITIES AND EXCHANGE COMMISSION PAGE 1 OF 2

Background

While ESG strategies have existed for decades, investor interest in these strategies has 

rapidly increased in recent years, with significant inflows of capital to ESG-related investment 

products and advisory services. Asset managers have responded to increased demand by 

creating and marketing ESG products.

The ways that different funds and advisers define ESG can vary widely. Similarly, there are 

significant differences in the data, criteria, and strategies used as part of ESG strategies. 

The lack of disclosure requirements and a common disclosure framework tailored to ESG 

investing make it harder for investors who seek to understand which investments or 

investment policies are associated with a particular ESG strategy. In the absence of 

informative disclosures, a fund’s or adviser’s disclosure could exaggerate its actual 

consideration of ESG factors.

The proposed rule and form amendments are designed to provide consistent standards for 

ESG disclosures, allowing investors to make more informed decisions as they compare 

various ESG investments. The proposal’s framework for ESG-related strategy disclosure is 

designed to allow investors to determine whether a fund’s or adviser’s ESG marketing 

statements translate into concrete and specific measures taken to address ESG goals and 

portfolio allocation. The proposal also requires certain environmentally focused funds to 

disclose information regarding the GHG emissions associated with their portfolio.

The Securities and Exchange Commission proposed amendments to rules and disclosure 

forms to promote consistent, comparable, and reliable information for investors concerning 

funds’ and advisers’ incorporation of environmental, social, and governance (“ESG”) factors.

The proposed changes would apply to registered investment companies, business 

development companies (together with registered investment companies, “funds”), registered 

investment advisers, and certain unregistered advisers (together with registered investment 

advisers, “advisers”). The rules and form amendments would enhance disclosure by: 

● Requiring additional specific disclosure requirements regarding ESG strategies in fund 

prospectuses, annual reports, and adviser brochures; 

● Implementing a layered, tabular disclosure approach for ESG funds to allow investors 

to compare ESG funds at a glance; and

● Generally requiring certain environmentally focused funds to disclose the greenhouse 

gas (GHG) emissions associated with their portfolio investments.
FACT SHEET | ESG Disclosures for Investment Advisers and Investment Companies

U.S. SECURITIES AND EXCHANGE COMMISSION Page 2 of 2

Proposed Amendments

ESG Strategy Disclosure for Funds and Advisers

The proposal would require funds that consider ESG factors in their investment process to 

disclose additional information regarding their strategy. The amount of required disclosure 

depends on how central ESG factors are to a fund’s strategy and follows a “layered” 

framework, with a concise overview in the prospectus supplemented by more detailed 

information in other sections of the prospectus or in other disclosure documents, all of which 

would be reported in a structured data language. The proposal identifies the following three 

types of ESG funds:

• Integration Funds. Funds that integrate ESG factors alongside non-ESG factors in 

investment decisions would be required to describe how ESG factors are 

incorporated into their investment process. 

• ESG-Focused Funds. Funds for which ESG factors are a significant or main 

consideration would be required to provide detailed disclosure, including a 

standardized ESG strategy overview table.

• Impact Funds. A subset of ESG-Focused Funds that seek to achieve a particular 

ESG impact would be required to disclose how it measures progress on its objective.

Advisers that consider ESG factors would be required to make generally similar disclosures 

in their brochures with respect to their consideration of ESG factors in the significant 

investment strategies or methods of analysis they pursue and report certain ESG information 

in their annual filings with the Commission.

Additional Disclosure Regarding Impacts and Proxy Voting or Engagements

Certain ESG-Focused Funds would be required to provide additional information about their 

strategies, including information about the impacts they seek to achieve and key metrics to 

assess their progress. The proposal would require funds that use proxy voting or 

engagement with issuers as a significant means of implementing their ESG strategy to 

provide additional information about their proxy voting or ESG engagements, as applicable. 

GHG Emissions Reporting

The proposal generally would require ESG-Focused Funds that consider environmental 

factors in their investment strategies to disclose additional information regarding the GHG 

emissions associated with their investments. These funds would be required to disclose the 

carbon footprint and the weighted average carbon intensity of their portfolio. The 

requirements are designed to meet demand from investors seeking environmentally focused 

fund investments for consistent and comparable quantitative information regarding the GHG 

emissions associated with their portfolios and to allow investors to make decisions in line 

with their own ESG goals and expectations. Funds that disclose that they do not consider 

GHG emissions as part of their ESG strategy would not be required to report this information.

Integration funds that consider GHG emissions would be required to disclose additional 

information about how the fund considers GHG emissions, including the methodology and 

data sources the fund may use as part of its consideration of GHG emissions. 

Additional Information:

Visit sec.gov to find more information about the proposed rulemaking and the full text of the proposing release. 

The public comment period will remain open for 60 days after publication in the Federal Register.