September 27, 2021

Volume XI, Number 270

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September 24, 2021

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New SEC Task Force Confirms Commitment to ESG Focus

A series of recent announcements by the SEC underscores the agency’s commitment—and allocation of resources—to its heightened focus on environmental, social and governance (“ESG”) issues.  Significantly, on March 4, 2021, the SEC announced the creation of a Climate and ESG Task Force in the Division of Enforcement.1   As discussed in a prior alert, companies should be prepared for greater scrutiny of their disclosures concerning ESG, as well as related litigation, and these recent developments reinforce that analysis.        

The Climate and ESG Task Force, led by Kelly L. Gibson, the SEC’s Acting Deputy Director of Enforcement, will focus on identifying “material gaps or misstatements in issuers’ disclosures of climate risks under existing rules,” examining “disclosure and compliance issues related to investment advisers’ and funds’ ESG strategies,” and evaluating whistleblower complaints related to ESG issues.  Acting Deputy Director Gibson said in a statement that the new Task Force would further the agency’s goal of “[p]roactively addressing emerging disclosure gaps that threaten investors and the market.”

The creation of the Climate and ESG Task Force follows similar recent announcements from the SEC that emphasize ESG as a priority.  For example, on February 24, 2021, Acting SEC Chair Allison Herren Lee directed the Division of Corporate Finance to focus on climate-related disclosures in public company filings.2  Consistent with that direction, the SEC announced its intention to review companies’ compliance with guidance the SEC issued in 2010 concerning climate-related disclosures, as well as to update and modernize that 2010 guidance “to take into account developments in the last decade.”  In issuing the directive, Acting Chair Lee acknowledged that, “[n]ow more than ever, investors are considering climate-related issues when making their investment decisions” and recognized the public interest in “consistent, comparable, and reliable climate-related disclosures.”  

Additionally, on March 3, 2021, the SEC’s Division of Examinations announced its 2021 examination priorities, which further confirmed the SEC’s enhanced focus on ESG.3  Noting that investment advisors are “increasingly offering investment strategies that focus on ESG factors,” the Division announced that it would be scrutinizing the consistency and adequacy of the disclosures made by investment advisors and funds to clients seeking ESG-related investment strategies.  In a statement accompanying the announcement, Acting Chair Lee explained:  “This year, the Division is enhancing its focus on climate and ESG-related risks by examining proxy voting policies and practices to ensure voting aligns with investors’ best interests and expectations, as well as firms’ business continuity plans in light of intensifying physical risks associated with climate change.”

Notably, Gary Gensler, President Biden’s nominee for SEC Chair, has offered additional clues as to the direction of the SEC’s enforcement efforts.  During a nomination hearing before the Senate Committee on Banking, Housing, and Urban Affairs on March 2, 2021, Gensler signaled that he would likely maintain the SEC’s recently-announced focus on ESG-related disclosures.  Gensler testified that “there’s tens of trillions of dollars of invested assets that are looking for more information about climate risk,” adding that “the SEC has a role to play to bring some consistency and comparability to [ESG disclosure] guidelines.”  The Senate is expected to confirm Gensler as the SEC Chair. 

There are numerous steps companies and financial institutions can take to ensure they are prepared for the new initiatives and heightened scrutiny from both regulators and investors.  Bracewell has a multi-disciplinary team focused on ESG issues.  We advise and support our clients drawing on our expertise in environmental strategies, securities matters, regulatory issues, government enforcement, commercial litigation, and crisis management, and we are at the forefront of the transition to sustainable energy.  Please contact your Bracewell team member for more information.

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1 https://www.sec.gov/news/press-release/2021-42

https://www.sec.gov/news/public-statement/lee-statement-review-climate-related-disclosure

3 https://www.sec.gov/news/press-release/2021-39

© 2021 Bracewell LLPNational Law Review, Volume XI, Number 67
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Keith Blackman Securities Lawyer Bracewell Law Firm
Partner

Keith Blackman defends clients in disputes involving complex securities before the Financial Industry Regulatory Authority (FINRA), as well as in trial and appellate courts. He primarily represents financial services clients in cases involving claims of fraud, malpractice, racketeering, breach of contract and securities law violations. He also has experience in tax disputes, intellectual property litigation and white-collar defense. Over the course of his career, Keith has appeared in state and federal courts in New York and around the country.

212.508.6132
Joshua Klein Corporate Securities Lawyer Bracewell
Partner

Josh Klein represents corporations and individuals in complex disputes involving corporate, securities and commercial issues. He advises clients, both as plaintiffs and defendants, in cases involving allegations of breach of contract, fraud, tortious interference, fiduciary duty, antitrust and violations of the Racketeer Influenced and Corruption Organzaitions Act (RICO). Josh also advises entities and individuals in various enforcement investigations and proceedings brought on by governmental agencies and regulators.

Josh regularly appears before federal and state courts across the...

212.508.6153
Rachel goldman, complex commercial litigation, attorney, Bracewell law
Partner

Rachel Goldman is an experienced litigator in both federal and state courts, at the trial and appellate levels. Her practice focuses on complex commercial matters, including claims for breach of contract, post-acquisition disputes, class actions, False Claims Act cases, insurance coverage disputes, contested bankruptcy matters, challenges under the Commerce Clause and the Supremacy Clause, government regulation, securities litigation, construction law, First Amendment and libel actions. Additionally, Rachel's tenure as in-house counsel provides a valuable perspective of...

212-508-6135
Matthew G. Nielsen energy and finance lawyer Bracewell
Partner

Matthew Nielsen has over 17 years of experience defending corporations, corporate executives and employees, and securities industry professionals in civil and criminal investigations, as well as securities investigations and litigation. He represents US and international clients on matters related to federal and state securities laws, US export controls and sanctions laws and regulations, Foreign Corrupt Practices Act, whistleblower complaints, accounting fraud and healthcare fraud.

He regularly practices before state and federal regulatory and law enforcement...

214 758 1039
Russell W. Gallaro Litigation Attorney Bracewell New York, NY
Associate

Russell Gallaro represents clients, both private and public entities, in an array of complex commercial litigation matters that involve securities, derivatives, fraud, Racketeer Influenced and Corrupt Organizations Act (RICO) and contract disputes. His clients reflect the financial services and commercial sectors, and he regularly appears in state and federal courts, as well as in arbitration proceedings and before the Financial Industry Regulatory Authority (FINRA).

212-508-6149
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