Climate Finance Policy Engagement Analysis
Climate Lobbying Overview: The Investment Company Institute (ICI) is actively engaged on climate-related finance policy in the US and globally, opposing stringent regulatory intervention for the financial sector in terms of climate-related disclosure, fiduciary requirements, or standards for funds.
Top-Line Messaging on Climate-Related Financial Policy: ICI has appeared generally unsupportive of government action on climate-related financial policy, particularly action by the US Securities and Exchange Commission (SEC). In ICI’s 2022 Annual Report it detailed that it had engaged with the SEC to advocate for “practical alternatives to onerous requirements” in climate rulemaking. In a 2023 Reuters article ICI was unsupportive of the EU’s regulatory efforts to define greenwashing for investment funds
Position on Regulated Corporate Climate Disclosure: ICI has voiced support for the need for improved climate disclosure while outlining objections to specific disclosure policies. In 2021, ICI called on the SEC to mandate emissions disclosure for companies and in a press release called for coordination between the US and Europe in disclosure standards. When the SEC released its climate disclosure proposal in March 2022, ICI President and CEO Eric J. Pan voiced support for the framework, but in ICI’s 2022 comments on the proposal it objected to several aspects including Scope 3 disclosures and certain governance and strategy reporting requirements. ICI expressed concerns about the SEC’s climate disclosure rulemaking in its 2022 Annual Report and in a 2024 joint white paper, and in March 2024 after the SEC finalized its rule CEO Eric J. Pan applauded the Commission’s decision to remove Scope 3 disclosures from the final rules.
ICI has also objected to Scope 3 disclosure requirements in 2022 comments on the International Sustainability Standards Board’s (ISSB) disclosure drafts, 2023 comments to the Australian Treasury, and 2023 comments to the UK Government. In 2022 comments to the European Financial Reporting Advisory Group (EFRAG), ICI objected to the European Sustainability Reporting Standards (ESRS) proposed double materiality approach and emissions disclosure requirements.
Position on Climate Standards, Labels, and Benchmarks: ICI has been actively opposed to the SEC’s proposed amendments to the Investment Company Names rule to encompass ESG-related funds. In comments on the proposal in 2022, ICI wrote that it “strongly opposed” the expansion of the names rule. In December 2022, ICI General Counsel Susan Olson wrote an opinion piece in the Financial Times that called for the SEC to abandon the proposal, and in a 2022 statement President and CEO Eric J. Pan called for the rule to be “discarded.” In supplemental comments to the SEC in 2023, ICI asserted that its Names Rule amendments were outside of the Commission’s statutory authority and could violate the First Amendment. In a 2023 response to the European Securities and Markets Authority’s (ESMA) guidelines on funds using ESG names, ICI suggested that the guidelines were “premature” and did not support the proposed quantitative threshold for ESG-related funds. In 2023 comments to the European Commission on implementation of the Sustainable Finance Disclosure Regulation (SFDR), ICI advocated against setting minimum criteria for sustainability-related financial products, opposing restrictions on fund naming.
Position on Incorporating Climate Factors Into Investor Duties: ICI has generally not supported policy to expressly integrate climate factors into investor duties. In 2022 comments to the Department of Labor, ICI advised against a requirement for fiduciaries to consider climate risk in decision making or disclose how they consider climate risk in decision making. Also in 2022, ICI outlined several objections to the SEC’s proposed ESG disclosure rule for investors, requesting disclosure requirements for "Integration Funds" be eliminated and requesting proxy voting and engagement disclosure requirements for "ESG-Focused Funds" be eliminated. ICI submitted supplemental comments on this rulemaking in May, July, and November 2023, asserting that the disclosure requirements violate the First Amendment by “compelling misleading speech,” suggesting that instead of specific quantitative metrics disclosures should be narrative in nature, and advocating for any emissions disclosure requirements for funds to be implemented after public company emissions disclosures are finalized. After the SEC stayed its public company disclosure rule in April 2024, ICI wrote to the SEC asserting that this action necessitated a stay of and weakened ambition for any fund disclosures.
ICI has expressed concern about the emerging trend of political efforts to discourage ESG investing (so-called “anti-ESG” policies). In a 2022 press release, ICI characterized the Texas Comptroller’s decision to restrict business with firms and funds due to their use of ESG factors as “harming the ability of Texas police, firefighters, teachers, and other state civil servants to save for a secure financial future.” CEO Eric Pan outlined his opposition to the “politicization” of investing in a September 2022 opinion piece, criticizing both policies to restrict ESG investing and policies to promote ESG investing. In 2023 comments to the Wyoming Secretary of State, ICI opposed regulations that sought to discourage ESG investing.