Last week, Allison Lee, Acting Chair of the SEC, directed the staff of Corp Fin to “enhance its focus on climate-related disclosure in public company filings.” Yesterday, the SEC announced that the new climate focus would not be limited to Corp Fin—the SEC has created a new Climate and ESG Task Force in the Division of Enforcement. According to the press release, the initial focus of the Task Force will be to identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing rules, giving us all another reason to excavate the staff’s 2010 interpretive guidance regarding climate change. (You may recall that the guidance addressed in some detail how existing disclosure obligations, such as the Reg S-K requirements for business narrative and risk factors, could apply to climate change. See this PubCo post.) Apparently, however, the remit of the Task Force goes beyond climate to address other ESG issues. Lee said that the Task Force is designed to bolster the efforts of the SEC as a whole in addressing climate risk and sustainability, which “are critical issues for the investing public and our capital markets.”
The press release indicates that the Task Force “will develop initiatives to proactively identify ESG-related misconduct,” and “coordinate the effective use of Division resources, including through the use of sophisticated data analysis to mine and assess information across registrants, to identify potential violations.” In addition, the 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.” The Task Force will also analyze disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.
The Task Force will be composed of 22 members from the SEC’s headquarters, regional offices and Enforcement specialized units and led by the Deputy Director of Enforcement. The Task Force’s efforts are intended to complement the SEC’s other initiatives in this area, and its members will work closely with other Divisions and Offices of the SEC.