ESG fund sales and the Earth’s temperature trends appear correlated

Mutual funds that incorporate ESG factors into their investment process, or are marketed as ESG-specific, are showing positive sales growth. Is this related to the global temperature increase and continued climate change risks outlined in the recent IPCC report? Perhaps, but whether one or more of those risks is sufficiently material to investors is still being debated, though recent a recent survey shows that investors are starting to view ESG as directly affecting performance. Yet, in the 2018 Callan ESG survey, lack of (sufficient) data showing a link between investment performance and one or more ESG factors was cited as a top reason why institutional investors were not incorporating ESG factors or investing in ESG products. As more and more studies come out on the issue of materiality, we can, therefore, expect greater adoption. The Department of Labor placed particular emphasis on this point in its April guidance.

SEC Investor Advisory Committee to hold Nov. 7 telephone meeting

The Securities and Exchange Commission’s Investor Advisory Committee will meet telephonically on Nov. 7 at 2 p.m. Eastern Time. The public is invited to listen to the meeting live using the dial-in details provided below. A recording of the meeting will be archived on the committee’s webpage for later listening.

SEC Chairman Jay Clayton

The committee will discuss the SEC’s Proposed Regulation Best Interest and Form CRS Relationship Summary (which may include a Recommendation of the Investor as Purchaser Subcommittee). The agenda for the meeting is available here.

Members of the committee represent a wide variety of investor interests, including those of individual and institutional investors, senior citizens, and state securities commissions. For a full list of committee members, see the committee’s webpage.

The Investor Advisory Committee was established to advise the SEC on regulatory priorities, the regulation of securities products, trading strategies, fee structures, the effectiveness of disclosure, and on initiatives to protect investor interests and to promote investor confidence and the integrity of the securities marketplace. The committee is authorized to submit findings and recommendations to the Commission.

Conference Call Details:  The public may dial in to the meeting toll-free by calling (800) 260-0702 in the United States or (651) 291-1170 outside the United States. Access Code: 455778.

UN PRI warns signatories (particularly, investment managers) that they are prepared to thin the herd

While we have been alerting clients to this risk for the past several months, there is now some media pickup on a new initiative of PRI: to target (mostly) asset manager-signatories who have not undertaken steps to implement the PRI principles with the (ultimate) threat of delistment. Though the number of  signatories that are US managers and institutional investors has swelled (though stills noticeably trails that of Europe), there has been a concern of a “set it and forget it” mentality. Investment managers are encouraged to review PRI guidance on compliance (especially the guidance intended for asset owners) and reach out to them to facilitate achievement.