News Release: SEC Finalizes One of Two Important Anti-Greenwashing Rules


September 20, 2023

Carter Dougherty

SEC Finalizes One of Two Important Anti-Greenwashing Rules

Washington, D.C. – The Securities and Exchange Commission’s decision to finalize its “Name Rule,” proposed last year, is an important step towards addressing rampant greenwashing and other deceptive and misleading practices by investment funds.

The rule will require funds that have names that indicate their incorporation of one or more environmental, social, or governance (ESG) factors in their investment decisions to adopt a policy to invest at least 80% of their assets in the investments suggested by that name. 

Retail investors – including workers saving for retirement – shouldn’t have to worry about putting their money in funds that don’t walk the walk,” said Natalia Renta, senior policy counsel for corporate governance and power at Americans for Financial Reform Education Fund. “Fund managers should honor investors’ choices and goals, not use deceptive or misleading fund names to fleece them.”

The SEC has yet to finalize an important, complementary rule it proposed last year that would require funds and advisers to provide disclosures about their ESG investment practices.

“While the rule the SEC finalized today is an important step in tackling greenwashing and other misleading practices by investment funds, the SEC must also finalize a strong disclosure framework for ESG-branded funds to more fully protect investors and equip them with the information they need to make decisions about where to invest their money,” Renta added.

For more information, read AFREF’s technical comment letter in support of the rules and the AFREF-led sign-on comment letter with 96 signatories

AFREF Project on Corporate Governance & Power Towards corporate decision-making that is people-driven, not Wall Street-driven