Considerations for Fund Boards that Oversee ESG Products

In the last installment of a four-part series on recent ESG regulatory developments, Gwen Williamson, Partner at Perkins Coie in Washington, DC, sets forth a series of questions directors should consider if the fund complex they oversee has an ESG product. The post notes that “fund boards should work with the chief compliance officer (CCO) and the fund adviser to understand the overall approach to ESG investing in the fund complex.” Questions include:

• To what portion of the complex does the adviser’s ESG investment approach apply?
• Does the adviser have an ESG taxonomy that is used consistently across the complex?
• How does the adviser assess its performance and the funds’ performance in meeting ESG objectives, and any impact objectives in particular?
• What additional fees do shareholders pay, if any, in connection with the adviser’s ESG approach?

Additionally, registered fund boards should discuss with management, the fund CCO, and counsel to ensure the ESG-related expectations articulated by the SEC staff in the April 2021 Risk Alert are met.