Investing with purpose? You might need to watch what you say. What happened: The Ontario Securities Commission (OSC) has alleged that Purpose Invest Inc. and its founder, Som Seif, made false or misleading statements about its environmental, social, and governance (ESG) investing. The company claimed that 75% of funds considered ESG factors, while OSC claims it was only 35%.
- If found guilty, the punishment carries a $5 million fine per violation, and Seif would be temporarily banned from the investing industry.
- Seif says the allegations are nonsense, calling the case political, and does not plan to settle with the regulator. The first hearing is set for Oct. 6.
Catch-up: Companies are facing a lot more scrutiny over greenwashing these days after Bill-59 made it easier for companies to be sued over climate claims. Just last month a first-of-its-kind greenwashing complaint under securities law was levied against Canadian oil companies Cenovus Energy and Enbridge.
Why it matters: Purpose Inc. was a leading ESG investor in 2019. While the allegations have yet to be proven in court, this case and recent ESG trends illustrate the tightrope that money managers are facing in this challenging political (and environmental) climate.
Zoom out: Fewer international companies have entertained ESG initiatives by shareholders, but some asset owners are still demanding it — notably in Europe. BlackRock recently lost a lucrative Netherlands pension mandate over the company’s climate policies and acquiescence to Trump’s climate talk.—GS