Trump Administration SEC Withdraws Proposed Anti-Greenwashing Rule
On June 17, the SEC officially withdrew a proposed rulemaking undertaken by the Biden Administration that sought to combat greenwashing in ESG (or similarly labeled funds). Specifically, the proposed rule would have “facilitate[d] enhanced disclosure of ESG issues to clients and shareholders” (according to the SEC) by mandating “more specific disclosures . . . based on the ESG strategies [that funds and advisers] pursue” including that “[f]unds focus[ing] on environmental factors generally would be required to disclose the greenhouse gas emissions associated with their portfolio investments.” In essence, the SEC would have required funds to provide disclosures demonstrating that these funds actually conformed to their proclaimed ESG strategy. This rule had been proposed in tandem with the SEC “Names Rule" (which was finalized and entered into effect), each of which sought to address perceived problems with greenwashing in the investment space.
Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment
The Securities and Exchange Commission (“Commission”) is formally withdrawing certain notices of proposed rulemaking issued between March 2022 and November 2023. The Commission does not intend to issue final rules with respect to these proposals. If the Commission decides to pursue future regulatory action in any of these areas, it will issue a new proposed rule.
The policy decision by the Trump Administration's SEC to withdraw this proposed rule is unsurprising, and is in accordance with a number of other recent initiatives by the Trump Administration that effectively rolled back various Biden Administration initiatives focused on climate, including the mandatory climate disclosure rule promulgated by the SEC (that the Trump Administration is no longer defending in the courts). Still, even if this particular move was expected, it nonetheless demonstrates further the U-turn that the Trump Administration has effectively tried to implement with respect to climate policy, especially concerning the various efforts to promote climate disclosures by companies and business organizations.
Author
