The SEC has made less noise on ESG in 2024 than the previous couple years. The Keurig enforcement action was the first ESG activity we’ve seen in awhile, standing in contrast to high profile ESG enforcement in 2022 and 2023, which included actions against Goldman Sachs and Vale S.A. In a surprising move last week, the SEC announced that it shuttered its ESG Enforcement Task Force. A recent Crowell memo discusses the move stating:
“The dissolution of the Climate and ESG Enforcement Task Force comes after three years marked by industry resistance and a mixed record in the courts. Prior to the Task Force’s dissolution, the agency removed ESG from its annual Examination Priorities Report, which provides areas of particular focus during SEC examinations. While the Task Force has been dissolved, the SEC is still pursuing a number of its proposed ESG and climate-related rules.”
The SEC’s step back from ESG leaves many questions.
- Is the SEC stepping back because they feel that ESG enforcement is not politically popular in an election year, or is it that investors no longer prioritize ESG and therefore it warrants less attention?
- Was the Keurig settlement a vestige of the ESG Task Force’s work or is the SEC still looking at enforcing ESG issues without a dedicated task force?
Despite the dissolution of the task force, the agency continues to defend its Climate Related Disclosures Rule in Court and is moving forward with rulemaking on its Enhanced Disclosures by Certain Investment Advisors and Investment Companies about Environmental, Social, and Governance Investment Practices. How the SEC approaches ESG sets the tone for the investment community, so we’ll be watching closely to see if the SEC doubles back to ESG in the future.
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