Invesco Advisers, managing $746 billion in assets across its mutual funds, has agreed to pay $17.5 million to settle allegations from the SEC that it inflated the volume of assets dedicated to environmental, social, and corporate governance (ESG) themes.
According to the SEC, between April 2020 and July 2022, the Atlanta-based firm issued “misleading statements” regarding the total assets classified as “ESG-integrated.” Invesco’s concerns about falling behind competitors in ESG investing reportedly began in 2019, with an internal analysis revealing that approximately $370 billion in assets were “at risk” of shifting to competitors with broader ESG offerings. In response, Invesco accelerated its “ESG integration” strategy, publishing reports that stated up to 94% of its assets were ESG-integrated.
However, these figures allegedly included passive strategies, which the SEC contends should not have qualified as ESG assets because they lacked active management or alignment with an ESG index. Among these was the Invesco QQQ Trust (ticker: QQQ), the firm’s largest ETF with $313 billion in assets, as reported by Morningstar.
Invesco has resolved the allegations without admitting or denying misconduct. The company expressed satisfaction with closing this chapter, noting that the SEC did not flag any specific fund or strategy but rather its aggregated ESG disclosures. Invesco ceased publishing the types of ESG reports referenced in the settlement in late 2022.
“Invesco Advisers has fully cooperated with the SEC investigation and remains committed to providing investment strategies that align with clients’ specific goals,” the company stated.
The SEC acknowledged Invesco’s cooperation, which influenced the penalty amount. “Invesco engaged with commission staff voluntarily on multiple occasions, offering summaries of relevant facts,” the SEC noted.
The settlement highlights the growing regulatory scrutiny over “greenwashing,” where firms are accused of overstating their ESG commitments. In a similar case, WisdomTree Asset Management settled with the SEC for $4 million in October, facing allegations of misrepresenting its ESG screening practices to the boards of three ETFs from 2020 to 2022.
