SEC launches Climate and ESG Task Force

Rick Steves

The task force will develop initiatives to identify ESG-related misconduct and use data analysis to mine and assess information across registrants, to identify potential violations.

The Securities and Exchange Commission has created a Climate and ESG Task Force with 22 members drawn from the SEC’s headquarters, regional offices, and Enforcement specialized units.

The task force will develop initiatives to identify ESG-related misconduct and use data analysis to mine and assess information across registrants, to identify potential violations.

The SEC has decided to create the task force amid the increasing investor focus and reliance on climate and ESG-related disclosure and investment.

The ESG task force will aim to identify any material gaps or misstatements in issuers’ disclosure of climate risks and analyze disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.

Acting Chair Allison Herren Lee, said: “Climate risks and sustainability are critical issues for the investing public and our capital markets. The task force announced today will play an important role in enhancing and coordinating the efforts of the Division of Enforcement, the Office of the Whistleblower, and other parts of the agency to bolster the efforts of the Commission as a whole on these vital matters.”

Acting Deputy Director of Enforcement Kelly L. Gibson will lead the task force. “Proactively addressing emerging disclosure gaps that threaten investors and the market has always been core to the SEC’s mission. This task force brings together a broad array of experience and expertise, which will allow us to better police the market, pursue misconduct, and protect investors.”

The task force will also pursue tips, referrals, and whistleblower complaints on ESG-related issues.

 

SEC to update 2010 guidance and tackle corporate greenwashing

In late February 2021, the SEC had announced it was about to get more aggressive on climate-related disclosure in public company filings.

Acting Chair Allison Herren Lee, Director of the Division of Corporation Finance at the SEC, said her staff will review the extent to which public companies address the topics identified in the 2010 guidance regarding disclosure of climate change matters.

The SEC’s enhanced focus in this area will have the staff assessing compliance with disclosure obligations under the federal securities laws, engage with public companies on these issues, and absorb critical lessons on how the market is currently managing climate-related risks, the announcement said.

The SEC intends to update the 2010 guidance to take into account developments in the last decade.

“The staff of the SEC plays a critically important role in ensuring compliance with disclosure obligations, including those that implicate climate risk, through its review of public company filings and its engagement with issuers. The perspective the staff brings to bear is invaluable in helping to ensure that issuers comply with their obligations and that investors receive the information they need to properly inform their investment decisions”, said SEC’s Acting Chair Allison Herren Lee.

“Now more than ever, investors are considering climate-related issues when making their investment decisions. It is our responsibility to ensure that they have access to material information when planning for their financial future. Ensuring compliance with the rules on the books and updating existing guidance are immediate steps the agency can take on the path to developing a more comprehensive framework that produces consistent, comparable, and reliable climate-related disclosures”, Ms. Lee added.

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