Canada securities watchdog seeks first greenwashing sanction

Core Viewpoint - The Ontario Securities Commission (OSC) is taking enforcement action against Purpose Investments Inc. for allegedly misleading claims regarding its incorporation of environmental, social, and governance (ESG) factors in its investment processes [1][3]. Group 1: Allegations and Findings - The OSC alleges that Purpose Investments made misleading statements about its ESG practices between September 2019 and March 2023, claiming to embed ESG principles across its entire investment process [1][2]. - The OSC identified at least 19 instances where Purpose and its founder, Som Seif, marketed their ESG credentials, including on the company's website and in media interviews [2]. - The OSC claims that Purpose did not consider ESG factors in investment decisions for many of its funds and lacked a formal ESG policy [3]. Group 2: Financial Discrepancies - According to the OSC, less than 35% of Purpose's assets under management considered ESG factors in 2019, despite the company claiming that the percentage was 75% [3]. Group 3: Company Response and Context - Purpose Investments is contesting the enforcement action, with a hearing scheduled for October 6 [3]. - Som Seif stated that the OSC's allegations do not indicate investor harm or prospectus violations and that the case is not based on investor complaints [4]. - In 2023, Purpose updated its disclosures to clarify which of its funds were classified as ESG following a request from the OSC [5]. - Seif expressed surprise at the OSC's decision to pursue enforcement action, describing it as targeting something minimal [6][7].