The U.S. Securities and Exchange Commission (SEC) has charged Invesco Advisers, Inc. with misleading investors about the percentage of its assets under management that integrated environmental, social, and governance (ESG) factors into investment decisions. The Atlanta-based investment firm has agreed to pay a civil penalty of $17.5 million to settle the charges.
According to the SEC’s findings, Invesco misrepresented the extent of its ESG integration from 2020 to 2022, claiming in marketing materials that between 70 and 94 percent of its assets were managed with ESG considerations. However, the SEC determined that a significant portion of those assets were actually invested in passive exchange-traded funds (ETFs) that did not incorporate ESG factors in their investment strategy.
The SEC’s order also revealed that Invesco had no formal, written policy to define what constituted “ESG integration,” a key issue in the charges. Despite making these claims, the firm lacked clear guidelines or processes to substantiate its ESG-related marketing.
“Invesco saw commercial value in claiming a high percentage of ESG-integrated assets, but simply saying so doesn’t make it true,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “Investment firms must be honest and transparent with their clients about how they manage assets. Companies should not exploit buzzwords like ‘ESG’ to capitalize on market trends.”
The SEC has charged Invesco with willfully violating the Investment Advisers Act of 1940. While the firm did not admit or deny the findings, it has agreed to cease the practices in question and pay the $17.5 million penalty. In addition, Invesco will be officially censured as part of the settlement.
The SEC’s investigation was led by Jonathan T. Menitove of the Asset Management Unit and Richard Rodriguez of the Atlanta Regional Office, with support from Robert K. Gordon. The inquiry was overseen by senior SEC officials, including Ruth Hawley and Stephen E. Donahue.
Invesco, one of the world’s largest asset management firms, is known for managing investment portfolios across a range of asset classes, including equities, fixed income, real estate, and alternative investments. The company, a subsidiary of Invesco Ltd., has a global presence and offers a variety of financial products, such as mutual funds, ETFs, and custom investment solutions.
In recent years, Invesco has placed increasing emphasis on ESG investing, positioning itself as a leader in responsible and sustainable investing. However, this settlement highlights the challenges and scrutiny that firms face in ensuring their ESG claims align with their actual practices.
The case serves as a reminder to other asset managers and investment firms about the importance of accurately representing ESG integration and adhering to regulatory standards in their marketing and investment strategies.
Invesco Advisers, Inc. is a global investment management firm that offers a wide range of financial products and services to individual and institutional investors. It is a subsidiary of Invesco Ltd., a large publicly traded asset management company headquartered in Atlanta, Georgia. Invesco Advisers is primarily known for managing investment portfolios across various asset classes, including equities, fixed income, real estate, and alternative investments.
