SEC probes ESG votes

The Securities and Exchange Commission (SEC) is attempting to rein in the misuse of ‘green’ and ‘ESG’ labels in investment products.

The latest target for action for the US regulator is focussed on managers of funds trading away their right to vote on ESG issues by lending out shares before corporate elections, only to then recall them after the vote, potentially ending up with short-sellers who would benefit from the opposite of an ESG position.

Short-term bets against ESG policies can make it harder for a fund manager to influence a company to be sustainable over a longer period.

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