The rise of environmental, social, and governance (ESG) investing didn’t only bring in new investors, but more scrutiny from government regulators like the Securities Exchange Commission (SEC). Still, with a more ESG-friendly presidential administration ready for installation in the White House, more beneficial legislation that could boost ETFs like the SPDR S&P 500 ESG ETF (EFIV).
The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of an index that provides exposure to securities that meet certain sustainability criteria (criteria related to environmental, social and governance (“ESG”) factors) while maintaining similar overall industry group weights as the S&P 500 Index.
In seeking to track the performance of the S&P 500 ESG Index (the “index”), the fund employs a sampling strategy, which means that it is not required to purchase all of the securities represented in the index. Overall, EFIV gives investors:
- Investment results that, before fees and expenses, correspond generally to the S&P 500 ESG Index.
- Exposure to an index that is designed to select S&P 500 firms meeting certain sustainability criteria (criteria related to environmental, social and governance factors) while maintaining similar overall industry group weights as the S&P 500 Index.
- Potential ESG core exposure, based on its focus on sustainability criteria and comprehensive market coverage of the flagship core S&P 500 Index.
ESG-Friendly Legislation On The Way?
Per a Motley Fool article, more ESG-friendly legislation could be on the way:
“The ESG saga of 2020 continues. In late October, President Trump’s Department of Labor passed a hotly contested rule that essentially prevents 401(k)s from offering ESG investments to plan participants,” the article said. “More recently, Rep. Andy Levin (D-Mich.) announced that he’s drafting two bills that take the opposite stance. Levin’s legislation, if passed, would require 401(k) plan administrators to adopt and publish an ESG investment policy, which means ESG funds could soon be an option in your retirement plan after all.”
“Levin’s bills, called the Sustainable Investment Policies Act and the Retirees Sustainable Investment Policies Act, aren’t slam dunks, even with a Democratic president-elect waiting in the wings,” the article added. “Levin doesn’t currently have the bipartisan support needed to pass his legislation this year. He has said he will put the bills before Congress again next year if necessary. His odds of success probably hinge on which party ends up in control of the Senate after the two runoff elections in Georgia.”
For more news and information, visit the ESG Channel.