Over the last few years, so-called sustainable investing, especially those that follow environmental, social and governance (ESG) considerations has grown. Reacting to this development, the Canadian Securities Administrators (CSA) Published Staff Notice 81-334, ESG Related Funds Disclosure (the Staff Notice) on January 27, 2023. The Staff Notice provides guidance on the disclosure practices of investment funds based on (ESG) considerations, and in particular those investment funds whose investment strategies that are based on ESG practices (ESG Funds), investment funds that use ESG strategies (ESG Strategy Funds, and together with ESG Funds, ESG-Related Funds). The Staff Notice also provides guidance on the types of investment funds that may market themselves as being focused on ESG.

Rather than break new ground, the Staff Notice builds upon and clarifies existing securities regulation including how the current securities regulatory requirements apply to ESG-related investment fund disclosure. It also includes examples of suggested best practices to enhance ESG-related disclosure and sales communications.

The Staff Notice reviews common ESG-related terms and strategies. It also discusses recent international and domestic developments in the field of ESG investing, including the recommendations from the 2021 Report from the International Organization of Securities Commissions (IOSCO) relating to investment product-level disclosure. The Staff Notice also provides guidance for ESG-Related Funds, and their investment fund managers, to enhance the ESG-related aspects of the funds’ regulatory disclosure documents and ensure that the sales communications of such funds are not untrue or misleading and are consistent with the investment funds’ regulatory offering documents.

CSA Staff Notice 81-334, ESG-Related Investment Fund Disclosure is available for download from the websites of participating CSA jurisdictions.

For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.

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