Regulatory Alerts2022-05-25
Environmental, Social, and Governance Disclosures for Investment Advisers and Investment Companies
The Securities and Exchange Commission proposes amendments to the Investment Advisers Act of 1940 and Investment Company Act of 1940 to mandate enhanced environmental, social, and governance (ESG) disclosures for registered investment advisers, funds, and business development companies. These standardized narrative and quantitative reporting requirements, including greenhouse gas metrics and structured Inline XBRL data tagging, aim to mitigate greenwashing risks while providing investors with consistent, comparable, and decision-useful information. The rule updates multiple regulatory forms such as Form ADV and Form N-CEN to establish uniform disclosure frameworks, streamline compliance procedures, and facilitate ongoing regulatory oversight of ESG investment strategies.