New SEC enforcement task force to focus on climate, ESG compliance

By Ken Tysiac

The SEC is creating a Climate and ESG Task Force in its Division of Enforcement to develop initiatives to proactively identify misconduct related to environmental, social, and governance issues.

Initially, the task force will identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing rules, the SEC said in its announcement of the new task force Thursday. The task force also will analyze disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.

Sophisticated data analysis will be used to mine and assess information across registrants to identify potential violations.

“Climate risks and sustainability are critical issues for the investing public and our capital markets,” SEC Acting Chair Allison Herren Lee said in a news release. “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.”

The Climate and ESG Task Force also will evaluate and pursue tips, referrals, and whistleblower complaints on ESG-related issues, and will provide expertise and insight to teams working on ESG-related matters.

“Proactively addressing emerging disclosure gaps that threaten investors and the market has always been core to the SEC’s mission,” Kelly L. Gibson, the acting deputy director of enforcement who will lead the task force, said in a news release. “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.”

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

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