Published: August 2022

SEC should end greenwashing by investment funds and require greater transparency

Nearly a hundred advocacy organizations signed on to a letter calling on the SEC to end greenwashing and increase transparency for funds classified as environmental, social and governance (ESG).

Consumer Action was one of 97 advocacy organizations that urged the Securities and Exchange Commission (SEC) to adopt stricter standards for the quickly growing “environmental, social and governance (ESG)” category of investment funds. The groups contend that many financial institutions use the ESG framework to position their funds as committed to social justice and environmental protection in order to attract the growing number of investors who choose investments that reflect their values, but fail to live up to those claims. For example, currently, some funds that purport to be climate-friendly actually invest billions in fossil fuels. To prevent greenwashing and increase transparency, the coalition recommended that the SEC, among other things, require that funds using labels such as “ESG,” “Sustainable” or “Green” describe how they define those terms and strategies, including what impacts they seek to achieve. The groups also recommended that disclosure be strengthened for ESG funds that invest in corporations doing business with the prison system or with firms that police low-income and BIPOC communities. 

Lead Organization

Americans for Financial Reform

More Information

Click here to read the full letter.

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