Invesco Advisors has agreed to pay $17.5 million to settle a U.S. Securities and Exchange Commission complaint that alleged the company misled investors about how much of its assets under management factored in environmental, social and governance factors in investment decisions.
With the settlement announced Friday, Atlanta-based Invesco did not admit to or deny the SEC’s findings, according to the SEC. But Invesco agreed to cease and desist from the alleged civil violations and to be censured, along with paying the civil penalty.
In recent years, many companies and banks have enacted goals related to environmental and social impact and have adjusted their investment and contracting guidelines to match. These guidelines can prioritize investments in companies or funds that promote sustainability or efforts to combat climate change or ones that match corporate diversity initiatives.
The SEC said from 2020 to 2022, Invesco told its clients that 70-94% of its assets under management were “ESG integrated,” using the acronym for the term “environmental, social and governance” that’s used in investing.
But the SEC said that share included “a substantial amount” of assets in passive exchange-traded funds that did not consider ESG factors in investment decisions, and that Invesco lacked a written policy defining ESG integration.
ESG-based investment decisions have also come under fire, particularly among conservative groups and many conservative states. Florida law bans the use of ESG considerations in state and local investment decisions. In Texas, a major oil producer, state law bars state and local agencies from doing business with institutions that weight investment decisions based on various environmental and social risks or opportunities.
In written comments Friday, Invesco Chief Communications Officer Andrea Raphael said: “We are pleased to resolve this matter related to historical statements made about the percentage of firm-wide assets under management that were ESG-integrated.”
Sanjay Wadhwa, acting director of the SEC’s division of enforcement, said in a written statement that “Invesco saw commercial value in claiming that a high percentage of companywide assets were ESG integrated. But saying it doesn’t make it so.”
“Companies should be straightforward with their clients and investors rather than seeking to capitalize on investing trends and buzzwords,” Wadhwa added.
Invesco’s Raphael said in her response Friday that the SEC order makes no allegations or findings related to disclosures about specific funds or investment strategies and that the company “has not issued public reports of firmwide ESG integration levels since late 2022.”
“Invesco Advisers, Inc. cooperated fully with the investigation and will continue to take a client-led approach of offering investment strategies tailored to the specific investment objectives of its clients,” Raphael said in her statement.
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