Invesco to Pay $17.5M Penalty to Settle SEC ESG Charges

Invesco Advisors has agreed to pay a $17.5 million civil penalty to settle Securities and Exchange Commission charges that it had misled investors about the percentage of company assets under management that included environmental, social, and governance elements in investing decisions, the regulator said in a press release Friday. 

According to the SEC, from 2020 to 2022, the Atlanta-based asset management giant said that between 70% and 94% of its parent company's AUM were "ESG integrated," but that the information was deceptive because the totals encompassed passively managed ETFs such as the Invesco QQQ Trust (QQQ) and Invesco S&P 500 Equal Weight ETF (RSP), which did not consider ESG in its investing decisions. The regulator noted that Invesco did not have a written policy that detailed ESG integration. 

"Invesco saw commercial value in claiming that a high percentage of company-wide assets were ESG integrated. But saying it doesn’t make it so,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “Companies should be straightforward with their clients and investors rather than seeking to capitalize on investing trends and buzzwords.”

SEC Increased ESG Vigilance

The SEC has grown increasingly vigilant about ESG claims in recent years as regulators try to tamp down on greenwashing and other misleading marketing meant to entice investors for whom these principles are important. Last month, the agency fined WisdomTree Asset Management $4 million for failing to follow its own investment criteria for three now defunct ETFs that were marketed under the banner of ESG. 

Read More: SEC Fines WisdomTree $4M for ETF Greenwashing

In its order regarding Invesco, the SEC said that Invesco had violated the Investment Advisers Act of 1940, which regulates the activities of investment advisors. The regulator said that Invesco did not admit or deny wrongdoing and "agreed to cease and desist from violations of the charged provisions."

In an emailed statement, Invesco said it was "pleased to resolve this matter," and that it "has not issued public reports of firmwide ESG integration levels since 2022."

Invesco noted that it had "cooperated fully with the investigation."