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Recent Announcements by the SEC and DOL Highlight Emphasis on ESG Investing

Recognizing increased investor focus on environmental, social and governance (ESG) investing and reliance on ESG-related disclosure, the SEC has taken multiple steps recently that demonstrate a clear emphasis on climate and ESG-related investing. In addition, the Department of Labor (DOL) announced a non-enforcement policy relating to its recently finalized rules for investment duties and proxy voting for ESG investments.

SEC Announces New “Climate and ESG Task Force”

On March 4, 2021, the SEC announced the creation of a new “Climate and ESG Task Force” within the Division of Enforcement. The SEC stated that the task force will develop initiatives to proactively identify ESG-related misconduct, including through the use of sophisticated data analysis to mine and assess information to identify potential violations. The task force’s initial focus will be to identify material gaps or misstatements in issuers’ disclosure of climate risks under existing rules and to analyze disclosure and compliance issues relating to ESG strategies. In addition, the task force will evaluate and pursue tips, referrals and whistleblower complaints on ESG-related issues and provide expertise and insight to other SEC teams working on ESG-related matters.

The press release announcing the new task force is available here.

SEC Publishes Investor Bulletin and Launches Web Page on ESG Investing

On February 26, 2021, the SEC’s Office of Investor Education and Advocacy published an investor bulletin highlighting potential considerations for investors considering purchasing an ESG fund. The bulletin is intended to educate investors about ESG funds, and to provide questions that investors should consider when deciding whether to invest in ESG funds. Additionally, the SEC recently launched a web page designed to create a central repository of the SEC’s ESG-related efforts and the latest information about climate and ESG investing.

The investor bulletin is available here.

The web page is available here.

Department of Labor Announces Non-Enforcement Policy for ESG and Proxy Voting Rules

On March 10, 2021, the DOL released an enforcement policy statement indicating that the DOL will not enforce its recently published rules relating to investment duties and proxy voting for ESG investments. These rules were finalized in the final months of the prior administration and sought to constrain the ability of ERISA plan fiduciaries to select ESG funds for retirement plans by generally requiring fiduciaries to consider only “pecuniary factors” when selecting investment options. The DOL stated that, until further notice, it will not pursue enforcement actions against any plan fiduciary based on a failure to comply with the provisions of these rules. The DOL noted that it intends to revisit the rules but did not provide any guidance on how or when such rules may be revised or rescinded.

The policy statement is available here.

© 2021 Vedder PriceNational Law Review, Volume XI, Number 110



About this Author

John Marten Investment Attorney Vedder Price Law FIrm

John S. Marten, a Shareholder in the Chicago office of Vedder Price, has substantial experience representing clients in the investment management industry.

As a member of the firm’s Investment Services group, Mr. Marten counsels clients on a wide variety of matters involving the application of the federal securities laws to investment companies, investment advisers and broker-dealers. He has significant experience counseling investment company clients with respect to new products and was recently involved in the creation of two mutual funds...

(312) 609 7753
Nathaniel Segal Investment Attorney Vedder Price Law Firm

Nathaniel Segal is counsel at Vedder Price and a member of the Investment Services group. He focuses his practice on investment companies and investment advisers in connection with the organization and operation of investment products and services, including traditional mutual funds, closed-end investment companies (including interval funds and listed closed-end funds), variable insurance products and registered hedge funds, as well as mutual funds utilizing complex hedging and absolute return strategies. Mr. Segal has experience in conducting transactional due diligence...

(312) 609 7747
Jacob Tiedt,Vedder Price law firm investment services attorney

Jacob C. Tiedt is a Shareholder at Vedder Price and a member of the Investment Services group.

Mr. Tiedt’s practice includes the representation of registered mutual funds, closed-end funds and exchange-traded funds; private funds; investment advisers; and other financial institutions on a broad range of regulatory, governance and compliance matters. Mr. Tiedt regularly counsels clients on matters relating to SEC registration, disclosure and compliance; shareholder solicitation; NYSE, Nasdaq and FINRA regulation; corporate governance; and board administration. Mr....