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11 March 2021
Elizabeth Pfeuti
The Securities and Exchange Commission (SEC) has formed a new taskforce to focus on climate change and ESG-related misconduct.
The 22-strong team will be headed up by acting deputy director of enforcement Kelly Gibson.
This taskforce will develop initiatives to proactively identify ESG-related misconduct. Data analysis will be used to mine and assess information across registered firms and identify potential violations.
The initial focus of this taskforce will be to identify any material gaps or misstatements in issuers’ disclosures of climate risks under existing rules. The SEC recently announced it would be reviewing its rules around climate risk disclosure, as these have been in place since 2010 without material updates.
The taskforce will also analyse disclosures and compliance issues relating to ESG funds.
“Climate risks and sustainability are critical issues for the investing public and our capital markets,” says SEC acting chair Allison Herren Lee. “The taskforce 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 these vital matters.”
This work will also include evaluating and pursuing tips, referrals and whistleblower complaints on ESG-related issues.
This is the latest ESG-related development from Herren Lee in a progressive turn for the regulator.
In February, the President Biden-appointed Herren Lee picked Satyam Khanna as senior policy adviser for climate change and ESG at the regulator.
During the Trump administration, the SEC had attracted widespread criticism for its perceived lack of work on encouraging shareholder activism and investor engagement on ESG issues. For instance, last year the SEC was criticised by investor groups after voting to adopt amendments many argued would frustrate shareholder activism.
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