It has been reported that the Securities & Exchange Commission has disbanded its Climate & ESG Task Force. This same task force had been launched with great fanfare in March 2021, at the beginning of the Biden Administration, in order to “develop initiatives to proactively identify ESG-related misconduct” and with a professed focus on “identify[ing] material gaps or misstatements in issuers' disclosure of climate risks under existing rules,” as well as “analyz[ing] disclosure and compliance issues relating to investment advisers' and funds' ESG strategies.” Since its establishment, the Climate & ESG Task Force had charged entities ranging from asset managers to mining companies for failing to follow internal procedures around ESG investment practices or to properly disclose the risks associated with ESG claims.
Notably, however, the Climate & ESG Task Force had initiated relatively few enforcement actions over the past three and a half years--although some of the ones it had pursued were fairly high-profile. Additionally, the SEC had pursued enforcement actions focused on ESG activities--e.g., greenwashing--without involving this task force, including a significant administrative proceeding in September 2023. So, even though the disbandment of the Climate & ESG Task Force sends a powerful signal that the SEC is effectively de-prioritizing ESG enforcement, it is altogether possible that the ultimate significance of this move may be minor, since it is not clear how active the task force has been, as a practical matter, for at least the past year.
Nonetheless, the significance of this administrative move should not be minimized. The SEC now appears to be moving away from the ESG and climate focus it had embraced under the Biden Administration--and the SEC has taken this step in advance of the November elections. Thus, regardless of the winner in this year's U.S. presidential election, it appears that ESG enforcement will be de-prioritized by the federal government.
The SEC has quietly disbanded a group of enforcement lawyers who helped bring litigation fighting misleading environmental, social and governance disclosures for more than three years.
The Securities and Exchange Commission shut down its Enforcement Division’s Climate and ESG Task Force within the past few months, an agency spokesperson told Bloomberg Law Thursday.
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