The Investment Funds Institute of Canada (IFIC) has published its comments in response to the CFA Institute’s call for consultation about its new ESG Disclosure Standards for Investment Products, a voluntary set of standards for investment managers.

The CFA Institute says the standards were developed in collaboration with its volunteer environmental, social and governance (ESG) technical committee and put out for comment to elicit feedback from stakeholders about the standard’s principles, requirements and recommendations. The comment period closed July 14.

IFIC says it welcomes the initiative to develop voluntary disclosure standards, adding that they are helpful for establishing and clarifying the type of information that could be included in an investment product’s disclosures.

At the same time, however, IFIC points out that the draft guidelines already acknowledge the standards do not require or prohibit the use of particular terms and are not intended to be a naming or labeling standard. “The standards do not establish thresholds or necessary or sufficient requirements for products to be considered ESG, responsible, sustainable or impact. The disclosure standards also do not provide global standards for categorizing approaches to ESG,” IFIC adds. “This limits their direct utility in providing advisors and retail investors with succinct and accessible information.” 

IFIC goes on to encourage the CFA Institute to continue work that was started in the Consultation Paper on the Development of the CFA Institute ESG Disclosure Standards and work toward incorporating standards for naming and categorizing ESG investment products.

“Without naming and categorization standards and established minimum standards for ESG product features, investors could confuse a compliant presentation with one that achieves a standard of ESG investment practice,