The Securities and Exchange Commission (SEC or Commission) revealed their 2023 Fall Rule List1 which serves as an agenda the Commission will focus on and provides the status of each rule. Currently, there are 43 proposed rules. In November of 2022, the Commission closed the Notice of Proposed Rulemaking comment period on Environmental, Social, Governance (ESG) reporting for investment firms and has since updated the status to the Final Rules Stage. The Rule states "4/00/2024" as the “Final Action” date and the date when investment firms can expect final guidance from SEC. This is likely a placeholder and DCI expects the final rule to be announced in the second quarter of 2024.
Given the current political climate regarding ESG disclosures, SEC is expected to take its time constructing a holistic rule on best practices. Please read DCI’s prior blog on the proposed SEC rule here.
Recommended Next Steps
It will be important for investment companies and investment advisors to watch this rule to ensure future ESG reporting within their organization is compliant with SEC standards. While there are currently no required metrics investment firms must produce, this rule could change the formatting of many organizations’ reports. The release date and timeline the Commission provides may also affect the annual reporting date for many firms.
DCI advises maintaining current ESG practices until further guidance is released. When SEC releases their final guidance, organizations should consider partnering with third party experts, such as DCI, as well as legal partners to determine appropriate next steps and whether current ESG practices should be changed going forward.
DCI will continue to monitor any further developments.
References
1 Securities and Exchange Commission (SEC). (2023). Enhanced Disclosures by Certain Investment Advisers and Investment Companies about Environmental, Social, and Governance Investment Practices. View rule.
