U.S. fund giant Invesco Advisers Inc. is settling greenwashing allegations brought by the U.S. Securities and Exchange Commission (SEC).
The regulator alleged that Invesco violated securities regulations by misleading investors about the share of its assets under management (AUM) that integrated ESG factors into investment decisions.
According to the SEC’s order, “Invesco made these statements in presentations to the boards of directors of funds it advised, in proposals to prospective clients, and in certain marketing materials.”
For instance, the regulator alleged that the firm’s marketing materials claimed that between 70% and 94% of its AUM were considered “ESG integrated,” when in reality, a large share of its assets were in passive ETFs that didn’t factor ESG considerations into investing decisions as they were tracking non-ESG indexes.
The alleged mis-statements came amid concerns about the company losing assets to rivals due to growing investor demand for ESG products.
“An internal analysis completed by senior ESG team members indicated that, company-wide, at least US$370 billion in AUM were ‘at risk’ of clients moving the assets to another firm, prompting Invesco to accelerate its ‘ESG integration’ effort,” the SEC’s order said.
Additionally, the SEC said the firm didn’t have a written policy for determining the share of overall AUM that counted as ESG integrated.
“Invesco saw commercial value in claiming that a high percentage of company-wide assets were ESG integrated. But saying it doesn’t make it so,” said Sanjay Wadhwa, acting director of the SEC’s division of enforcement, in a release Friday.
“Companies should be straightforward with their clients and investors rather than seeking to capitalize on investing trends and buzzwords.”
The firm agreed to settle the charges without admitting or denying the order’s findings. To resolve the charges, it agreed to pay a US$17.5-million penalty, to be censured and to cease and desist from violations.