The SEC proposals track EU requirements in certain respects, but differences in content and scope could leave advisory firms with increasingly complex compliance challenges.

Key Points:

..The proposal on ESG disclosures for investment advisers and registered investment companies would introduce requirements for advisers and registered funds that consider ESG factors in their investment processes to disclose more about those factors’ role in investment decisions.

..The Names Rule proposal would extend the 80% investment policy requirement to registered funds with names that suggest the fund focuses on investments/issuers with particular ESG characteristics.

..Together, the proposals make the United States just the latest in a series of jurisdictions to establish sustainability disclosure regimes for investment products, increasing global compliance challenges.