One of the great things that our colleagues on Regulatory Compliance Watch do is share with subscribers recent document request letters (redacted, obviously) from the SEC’s Office of Compliance, Inspections and Examinations. In a recent batch was a letter digging deep into one adviser’s approach to socially responsible investing (SRI), or environmental, social and governance-related investing (ESG).
Among the items requested by examiners from the SEC’s Los Angeles regional office were: the adviser’s definitions of the two terms and its policies and procedures for deciding whether an investment fits these criteria; details of any proprietary scoring system or third party scoring system; a list of clients with ESG/SRI investments; the identities of any service providers in this area; research and due diligence files from the advisers three best and three worst ESG/SRI trades; and any ESG-related marketing materials or industry award wins.
Is the SEC taking a greater interest in ESG? We’d love to hear your thoughts and experiences: email@example.com.