SEC Announces Enforcement Task Force Focused on Climate and ESG Issues

The SEC announced the creation of a Climate and ESG Task Force in the Division of Enforcement.  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. The Climate and ESG Task Force will develop initiatives to identify ESG-related misconduct and will coordinate the effective use of Division resources, including through the use of data analysis to mine and assess information across registrants, to identify potential violations, the SEC said. The initial focus will be to identify any 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 advisers’ and funds’ ESG strategies. In addition, the Climate and ESG Task Force will evaluate and pursue tips, referrals, and whistleblower complaints on ESG-related issues, and provide expertise and insight to teams working on ESG-related matters across the Division.  Meanwhile, a joint statement from Commissioners Hester Peirce and Elad Roisman expressed skepticism about the formation of the task force, noting that the Division of Examinations just recently made climate and ESG risks an exam priority in addition to initiatives by the Division of Corporate Finance to  review climate risk disclosures in public company filings. “The timing of this release—just before many public companies were due to file their annual reports—underscores its apparent function as a re-framing of the ongoing work, rather than the announcement of anything new,” according to the joint statement. The commissioners also stated that, while these new climate-related announcements “raise more questions than they answer, we look forward to working with SEC staff in the relevant divisions as they review disclosures, assess the adequacy of our guidance and rules, examine for compliance with our rules, and pursue securities law violations.”