On April 28, 2022, the Securities and Exchange Commission (SEC) announced an action against Brazilian mining company, Vale S.A., in relation to an environmental and social catastrophe: the collapse of its Brumadinho dam in January 2019 in Brazil. The SEC alleges that Vale made “false and misleading claims” about the safety of its dams prior to the incident by obtaining fraudulent safety reports. Notably, the SEC emphasizes that the company misled investors in its ESG disclosures because it concealed the environmental and economic risks posed by its dam. The dam’s collapse killed 270 people, caused significant environmental impacts from release of mining byproducts, and resulted in a loss of “more than $4 billion in Vale’s market capitalization.”
The SEC has been increasingly focused on public company ESG disclosures, and last year announced the creation of a Climate and ESG Task Force in the Division of Enforcement, which is leading this enforcement action against Vale. Public companies should be aware that the Task Force will continue to play a role in coordinating with the Division of Enforcement, the Office of the Whistleblower, and other parts of the agency to bolster its efforts on ESG matters.