The Creation of the SEC’s ESG Taskforce
The SEC’s institutional focus on ESG reached new heights on March 4, 2021, when the Commission announced the creation of a Climate and ESG Task Force in the Division of Enforcement. The Task Force’s primary focus is on developing initiatives to identify misconduct and potential violations relating to ESG, including the identification of “material gaps or misstatements in issuers’ disclosure of climate risks under existing rules.” The Task Force’s scope of responsibility extends beyond climate-related disclosures; for example, included among its responsibilities is the analysis of “disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.” Given this broad scope, it is little surprise that the Task Force is expected to coordinate closely with other SEC divisions and offices, including the Division of Examinations.
The Division of Examinations’ Review of ESG Investing Includes a Focus on Private Funds
The Division of Examinations is slated to play an important role in the agency’s ESG initiatives. Indeed, on March 3, 2021—one day before announcing the creation of the SEC’s Climate and ESG Task Force—the SEC announced its 2021 examination priorities, “including a greater focus on climate-related risks.” In announcing these priorities, Commissioner Allison Herren Lee specified that the Division of Examinations would enhance its focus on climate and ESG-related…