Purpose CEO Som Seif Vows to Contest OSC Greenwashing Claims

Som Seif, the founder and CEO of Purpose Investments, has announced his intention to “vigorously contest” allegations of greenwashing made by the Ontario Securities Commission (OSC). The OSC claims that Seif and his firm engaged in “false and misleading sales communications” regarding the role of environmental, social, and governance (ESG) factors in their investment strategies.

In a recent enforcement application, the OSC accused Purpose of misrepresenting how extensively ESG considerations were integrated into its investment decisions. Seif, who has positioned Purpose as a pioneer in ESG investing since 2019, stated, “I will always support our regulators in their important work, but I won’t make false admissions for convenience.”

Allegations of Misrepresentation

According to the OSC, Purpose Investments failed to consider ESG factors in many of the funds it managed between 2019 and 2023. The commission argues that Purpose did not have a formal policy or documented procedures to support its claims during this period. The OSC alleges that Seif authorized statements that could mislead investors, which is contrary to the Securities Act of 1990. As a consequence, the OSC is seeking to impose fines and suspend Seif and Purpose from managing investor funds.

Seif expressed confusion over the OSC’s decision to pursue enforcement action, noting that the commission has not alleged any investor harm or violations related to prospectuses. He emphasized that no complaints were raised about the firm’s vision during the relevant period, stating, “Frankly, we believe this process is not supported by the facts.”

Financial Transparency and ESG Integration

The OSC filing revealed that only 29 to 35 percent of the total assets under management (AUM) at Purpose in 2019 were invested in funds that had considered ESG factors, despite the firm claiming that funds representing 75 percent of total AUM operated under its ESG framework. This discrepancy has raised questions about the accuracy of Purpose’s ESG claims.

In a video posted on LinkedIn, Seif framed the OSC’s allegations as focusing on the quality of the firm’s ESG data sources and its communication of ESG disclosures, particularly during a time when regulatory frameworks for ESG were still evolving. The OSC argued that Purpose’s early commitments to ESG were “ad hoc” and relied on outdated data. It was not until 2022 that Purpose updated its prospectus documents to formally include ESG considerations for some funds.

Seif reaffirmed his commitment to transparency, stating that Purpose has always cooperated with regulatory inquiries. He emphasized that the firm opted to defend itself rather than settle by agreeing to terms that were not factual. “I will always support our regulators in their important work, but I won’t make false admissions for convenience,” he reiterated.

In response to the allegations, Purpose Investments maintains that the OSC’s concerns reflect interpretive questions about the evolving standards of ESG rather than substantive breaches. The firm expressed confidence that the upcoming capital markets tribunal process will allow it to demonstrate how its ESG integration methodology was developed transparently and in good faith, ultimately benefiting Canadian investors.

The outcome of this case could set significant precedents for how investment firms communicate ESG commitments and manage related disclosures in the future.