The Securities and Exchange Commission will be proactively taking steps to identify environmental, social, and governance-related misconduct. The agency is creating a Climate and ESG Task Force in its Division of Enforcement.
According to the SEC, the task force will be led by Kelly L. Gibson, the Acting Deputy Director of Enforcement, who will oversee a Division-wide effort, with 22 members drawn from the SEC’s headquarters, regional offices, and Enforcement specialized units.
“Climate risks and sustainability are critical issues for the investing public and our capital markets,” Acting Chair Allison Herren Lee said in a note. “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.”
In response to the increased investor focus on climate and ESG-related disclosures and investments, the Climate and ESG Task Force will be taking steps to identify ESG-related misconduct to protect investors and identify potential violations.
The task force’s initial focus will be on identifying material gaps or misstatements in issuers’ disclosure of climate risks under existing rules. The task force will also analyze disclosure and compliance issues relating to investment advisors’ and funds’ ESG strategies, according to the SEC.
“Proactively addressing emerging disclosure gaps that threaten investors and the market has always been core to the SEC’s mission,” Acting Deputy Director of Enforcement Kelly L. Gibson, who will lead the task force, said in a note. “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 announcement of the Task Force is another signal of the SEC’s future intention to provide further scrutiny on topics relating to ESG and climate change, as President Joe Biden pushes for a shift in the national agenda. For now, SEC disclosure obligations remain within line of current regulations and do not introduce new line-item disclosure requirements. However, the SEC has showed signs that it will focus more on climate-specific attention than it has historically, especially under the previous administration.
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