Federal regulators are smiting yet another big fund firm over greenwashing allegations. The folks at a $746-billion-AUM (as of December 31) subsidiary of an 8,400-employee, publicly traded, multi-national asset manager have settled charges, but this time the case isn't about a specific fund or strategy.

Andrew Ryan Schlossberg Invesco Ltd. President, CEO

Last Friday (November 8), Sanjay Wadhwa, director of the division of enforcement at the U.S. Securities and Exchange Commission (SEC), revealed charges that Invesco Advisers, Inc. (whose parent is Invesco Ltd. [profile]) violated the Investment Company Act of 1940 and the Investment Advisers Act of 1940 by not living up to the firm's own claims of firmwide "ESG integration." Atlanta-based Invesco Advisers settled the charges by agreeing to censure, a cease-and-desist order, and a $17.5-million penalty (due within 10 days of that order, i.e. by this coming Monday, November 18).

As per usual in many SEC enforcement cases, Invesco Advisers agreed to the sanctions without admitting or denying the regulatory agency's findings.

"We are pleased to resolve this matter related to historical statements made about the percentage of firmwide assets under management that were ESG-integrated. The SEC Order makes no allegations or findings related to disclosures about specific funds or investment strategies," an Invesco spokesperson told several publications (including 401kSpecialist, Pensions & Investments, and ThinkAdvisor). "Invesco has not issued public reports of firmwide ESG integration levels since late 2022. Invesco Advisers, Inc. cooperated fully with the investigation and will continue to take a client-led approach of offering investment strategies tailored to the specific investment objectives of its clients."

Indeed, the SEC team specifically highlighted Invesco Advisers' cooperation with the agency's staff.

"Throughout the investigation, Invesco voluntarily met with the Commission staff on multiple occasions and cooperated to provide factual summaries of relevant information," the SEC writes in the eight-page order on the settlement.

Unlike several other ESG greenwashing cases against fund firms (and one faithwashing case), the SEC's Invesco case is not a specific product or investment methodology. In the order ending this case, the SEC accuses Invesco Advisers of falsely claiming (in conversations with clients and prospects and in public "ESG investment stewardship reports") that between 70 and 94 percent of the firm's AUM was "ESG integrated" from April 2020 to July 2022. (Invesco is no stranger to public recognition involving ESG.) Yet much of Invesco's AUM is in passive strategies (including ETFs) tracking non-ESG indexes, according to SEC, and thus could not integrate ESG into investment strategy. And the regulators also claim that "Invesco had no comprehensive set of written policies and procedures concerning how Invesco would determine the percentage of firmwide AUM that was ESG integrated."

What was the motivation for all the ESG claims? The feds claim that the "ESG integration" efforts were driven by an internal Invesco analysis that suggested that at least $370 billion in AUM was "at risk" of moving to competitors.

T. Menitove from the SEC's asset management unit and Richard Rodriguez from the SEC's Atlanta regional office, with help from Robert Gordon, conducted the investigation of Invesco Advisers. Andrew Dean (from the SEC's asset management unit), Stephen Donahue (from the SEC's Atlanta regional office), Ruth Hawley (from the SEC's San Francisco regional office), and Corey Schuster (also from the asset management unit) supervised the investigation.

"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," Wadhwa states. "Companies should be straightforward with their clients and investors rather than seeking to capitalize on investing trends and buzzwords." 

Edited by: Neil Anderson, Managing Editor


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