The SEC's Climate and ESG Task Force has now issued its first enforcement action.  The SEC has brought a 76-page complaint in federal district court against Vale, S.A., a Brazilian mining company, alleging that Vale "ma[de] false and misleading claims about the safety of its dams."  Significantly, Vale "regularly misled local governments, communities, and investors about the safety of the Brumadinho dam through its environmental, social, and governance (ESG) disclosures."  (emphasis added)  

In essence, the SEC has brought a classic enforcement action against a company for allegedly misleading disclosures--and these disclosures are not just present in typical SEC forms (e.g, 20-F and 6-K), or in investor presentations, but in the separate ESG reports issued by Vale.  As stated in the SEC's complaint, the "false statements to investors [were] in SEC filings, the 2016 and 2017 Sustainability Reports, and the 2018 ESG Webinar."  This enforcement action by the SEC demonstrates that statements made in ESG reports should now be considered as ripe for litigation--whether public enforcement actions or private securities litigation--as classic sources of disclosures.    

Notably, the complaint also features allegations concerning corporate governance failures and problems with the auditing process related to the ESG reports and other disclosures.  The presence of these allegations may act to reinforce the SEC's focus on corporate governance and attestation in its proposed mandatory climate disclosures.