The Securities and Exchange Commission has created a Climate and ESG Task Force to help proactively identify misconduct related to environmental, social and governance (ESG) investing themes.
The task force will be part of the Division of Enforcement and led by the division’s acting deputy director, Kelly Gibson. The team of 22 people has been put together from members of the SEC’s headquarters, regional offices, and enforcement specialized units.
Initially, the group’s focus will be to identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing rules. The task force will also analyze disclosure and compliance issues relating to investment advisors’ and funds’ ESG strategies.
In addition, the task force will coordinate the effective use of Division resources, including using sophisticated data analysis to extract and assess information across regulated companies, to identify potential violations.
“Climate risks and sustainability are critical issues for the investing public and our capital markets,” said SEC acting chair Allison Herren Lee.
“The task force… 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.”
Gibson added: “Proactively addressing emerging disclosure gaps that threaten investors and the market has always been core to the SEC’s mission. This task force brings together a broad array of experience and expertise, which will allow us to better police the market, pursue misconduct, and protect investors.”
The SEC’s move marks a significant turnaround from last year when regulators made several efforts to discourage investors from using ESG criteria to make decisions. The Department of Labor pushed to ban pension funds from incorporating “social goals or policy objectives” into their strategies.
The task force’s work will complement the agency’s other initiatives in this area, including the recent appointment of Satyam Khanna as a senior policy advisor for climate and ESG.
As an “integral component” of the agency’s efforts to address these risks to investors, the task force will work closely with other SEC Divisions and Offices, including the Divisions of Corporation Finance, Investment Management, and Examinations.
It will also evaluate and pursue tips, referrals, and whistleblower complaints on ESG-related issues, and provide expertise and insight to teams working on ESG-related matters across the Division.