On Thursday, March 4th, the SEC announced the creation of a Climate and ESG Task Force in the Division of Enforcement to investigate alleged corporate environmental, social and governance misdeeds. The task force will be led by Kelly L. Gibson, the Acting Deputy Director of Enforcement. Its initial focus will be to identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing rules. According the SEC’s website, the task force will also “analyze disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.” Its work will complement the agency’s other ESG initiatives, including the recent appointment of Satyam Khanna as a Senior Policy Advisor for Climate and ESG.
While the wider implications for the creation of this task force remain unclear, the move could potentially signal a significant escalation in the Biden administration’s emphasis on ESG-focused issues. Acting Chair Alisson Herren Lee stated, “Climate risks and sustainability are critical issues for the investing public and our capital markets. The task force announced today will play an important role in enhancing and coordinating the efforts of the Division of Enforcement, the Office of the Whistleblower, and other parts of the agency to bolster the efforts of the Commission as a whole on these vital matters.” Though the extent of the SEC’s enhanced focus on climate-related matters has yet to be determined, ESG-related initiatives are expected to remain on the SEC’s upcoming agenda.