CANADA: Canadian securities regulators publish guidance on ESG-related investment fund disclosure

Thursday January 20 2022

The Canadian Securities Administrators (CSA) has published guidance for investment funds on their disclosure practices that relate to environmental, social and governance (ESG) considerations, particularly funds whose investment objectives reference ESG factors and other funds that use ESG strategies (ESG-Related Funds).

The guidance is based on existing regulatory requirements and addresses areas of disclosure, including investment objectives, fund names, investment strategies, risk disclosure, continuous disclosure and sales communications.

As the investment fund industry creates new funds and incorporates ESG considerations into existing funds to meet demand, there is an increased potential for “greenwashing” – where a fund’s disclosure or marketing intentionally or inadvertently misleads investors about the ESG-related aspects of the fund.

The guidance is intended to help investment funds and their fund managers enhance the ESG-related aspects of the funds’ regulatory disclosure documents and ensure that sales communications of ESG-Related Funds are not untrue or misleading and are consistent with the funds’ regulatory offering documents.

The guidance follows the CSA Roundtable on ESG-Related Regulatory Issues in Asset Management, which was held on September 27, 2021.

As part of its ongoing continuous disclosure review program, the CSA will continue to monitor the ESG-related disclosure of funds.

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