SEC Doubles Down on Climate and ESG Issues

SEC Doubles Down on Climate and ESG Issues

Blog Focus on Audit Committees, Accounting and the Law

Yesterday, the SEC announced the formation of a Climate and ESG Task Force in the Division of Enforcement.  This announcement follows Acting Chair Allison Herren Lee’s earlier statement directing the Division of Corporation Finance to enhance its focus on climate-related disclosures in public company filings, first by reviewing company disclosures and assessing companies’ compliance with disclosure obligations, including under the 2010 Commission Guidance Regarding Disclosure Related to Climate Change

Consistent with other enforcement priorities, the Division of Enforcement’s efforts will employ “sophisticated data analysis to mine and assess information across registrants, to identify potential violations.”  The Climate and ESG Task Force’s first area of focus is identifying “material gaps or misstatements in issuers’ disclosure of climate risks under existing rules.”  The task force will also be evaluating and pursuing tips, referrals and whistleblower complaints concerning ESG-related issues.  Acting Chair Lee noted that the task force 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 climate risk and sustainability matters.

For additional context, Commissioners Peirce and Roisman issued a separate statement yesterday, discussing the SEC’s climate-related announcements over the past few weeks.  The Commissioners also encouraged investors, issuers, and practitioners to engage with the SEC on these matters, noting that it would be “premature” for the SEC to enact “major changes to longstanding practices” without the benefit of such input.

See our March 15 client alert for deeper insights on the SEC’s redoubled focus on climate change and ESG disclosures.