Proposed SEC Ruling on ESG Disclosure for Investment Firms

By: Tyler Wurtz 

In June 2022, the Securities and Exchange Commission (SEC) announced a proposal to enhance Environmental, Social, & Governance (ESG) reporting for investment companies and advisors. The proposed rule would amend rules under the Investment Company Act of 1940 and the Investment Advisers Act of 1940 which specifically regulate the investment industry. While the details of the proposed reporting requirements are not finalized, the Commission’s goal is to increase transparency within investment firms for clients and shareholders. The proposed rule is “designed to create a consistent, comparable, and decision-useful regulatory framework…to inform and protect investors while facilitating further innovation.” (SEC, 2023).  

Within the proposal, financial institutions would be required to share an “ESG Strategy Overview” with investors which would allow investors to compare how different institutions utilize their ESG reports. In addition to creating minimum disclosure requirements for ESG reporting, firms would be required to describe the overview of the ESG strategy, divulge how their organization incorporates ESG factors in its decision making, and how organizations engage with other institutions about ESG issues.  

Recently, the SEC revealed their 2022 Fall Rule List which serves as an agenda the Commission will focus on and provides the status of each ruling. Currently, there are 52 proposed rulings. In August of 2022, the Commission closed the NPRM comment period on ESG reporting for investment firms and has since updated the status to the Final Rules Stage. The Rule states "10/00/2023" as the “Final Action” date and the date when investment firms could expect final guidance from the SEC. This is likely a placeholder and we expect the final rule to be announced within the next 8 months.  

It will be important for investment companies and investment advisors to watch this rule to ensure future ESG reporting is compliant with SEC standards. While there are currently no required metrics investment firms must produce, this ruling could change the formatting of many organizations’ reports. The release date and timeline the Commission provides may also affect the annual reporting date for many firms.  

DCI is following the ruling and will be releasing subsequent blogs to ensure our clients are updated on all ESG rulings. If you have any questions on the proposed ESG ruling or would like to know how your organization can prepare for future ESG guidance, please contact your DCI consultant.  


Securities and Exchange Commission (SEC). (2023). Enhanced Disclosures by Certain Investment Advisers and Investment Companies about Environmental, Social, and Governance Investment Practices. View rule.

    Stay up-to-date with DCI Alerts, sign up here:

    Advice, articles, and the news you need, delivered right to your inbox.


    Stay in the Know!