US SEC creates new ESG disclosure enforcement division
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US SEC creates new ESG disclosure enforcement division 08 March 2021US Reporter: Alex Pugh
Image: stock.adobe.com/Ana Gram
A new US Securities and Exchange Commission (SEC) Climate and ESG Task Force — composed of 22 members from across the agency — has been created to address environmental, social and governance (ESG)-related disclosure gaps.
“Proactively addressing emerging disclosure gaps that threaten investors and the market has always been core to the SEC’s mission,” says acting deputy director of enforcement Kelly Gibson, who will lead the new division.
“This task force brings together a broad array of experience and expertise, which will allow us to better police the market, pursue misconduct, and protect investors,” Gibson adds.
The move comes amid increasing investor scrutiny of climate and ESG-related disclosures. The task force will coordinate resources, use data analysis to assess registrants in order to identify potential violations, and develop initiatives to seek out any ESG-related wrongdoing.
It will also complement the work of the SEC’s other ESG-related initiatives, the agency says, including the recent appointment of Satyam Khanna as a senior policy advisor for climate and ESG.
The new body’s first steps will be to analyse disclosure and compliance issues and identify any discrepancies between disclosures of climate risks and the existing rules, as well as issues relating to investment advisers’ and funds’ ESG strategies.
In a sign of the increasing importance of ESG disclosures, the SEC says in a recent statement that as an “integral component” of the agency’s efforts to address these risks to investors, the task force will work alongside the divisions of corporation finance, investment management, and examinations.
“Climate risks and sustainability are critical issues for the investing public and our capital markets,” states acting SEC chair Allison Herren Lee.
“The task force announced today will play an important role in enhancing and coordinating the efforts of … other parts of the agency to bolster the efforts of the commission as a whole on these vital matters.”
Additionally, the Climate and ESG Task Force will receive, consider and chase up tips, referrals, and whistleblower complaints and provide expertise and insight to teams working on ESG-related matters across the enforcement division.
Elsewhere, the formation of the committee comes in tandem to similar efforts across the Atlantic to codify ESG practices across capital markets.
The first phase of the EU’s Sustainable Finance Disclosure Regulation (SFDR) comes in to effect on 10 March and will demand high level disclosures from financial institutions on any product they deem to be ESG-friendly.
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Image: stock.adobe.com/Ana Gram 