ESG Enforcement Tracker

Key facts:

On 8 November 2024, the SEC charged Invesco for making misleading statements about the percentage of its assets under management (AUM) that integrated ESG factors in investment decisions.

According to the SEC’s order, by the autumn of 2019, Invesco believed that incorporating ESG considerations into its portfolio management activities was of commercial importance. An internal analysis conducted by senior ESG team members indicated that at least 30% of the company’s AUM was at risk because interest in ESG integration had grown rapidly. Additionally, Invesco was receiving requests for proposal inquiries about ESG integration. As a result, Invesco decided to expedite its ESG integration efforts.

The SEC found that between approximately April 2020 and July 2022, Invesco made misleading statements concerning the company-wide percentage of AUM by it and its affiliates that was “ESG integrated,” a term that Invesco used to indicate the incorporation of ESG considerations into investment decision making processes. 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, including its ESG Investment Stewardship Report which it published in April 2021.

Invesco claimed that between 70% to 90% of its AUM was ESG integrated. However, the SEC found that these percentages included a substantive number of assets held in passive exchange-traded funds which did not consider ESG factors in investment decisions. Additionally, Invesco did not have a written policy that defined ESG integration, even though Invesco used that term in public documents.

The SEC ordered that Invesco cease and desist from committing or causing violations or future violations of the Investment Advisers Act 1940 and Rules, that Invesco is censured, and that it pays a civil penalty of USD$17.5 million to the SEC. Without admitting or denying the order’s findings, Invesco agreed to cease and desist from violations of the charged provisions, be censured, and pay the civil penalty.