Climate Change Risk and Disclosure: A New Focus for SEC Enforcement

By: Jacqueline C. Wolff
– Law Journal Newsletters’ Business Crimes Bulletin

Manatt Investigations, Compliance and White Collar Defense Partner Jacqueline Wolff authored an article for Law Journal Newsletters’ Business Crimes Bulletin about the SEC’s renewed focus on ESG (environmental, social and governance) funds and how companies should engage in an assessment of their climate risks and communicate the status of their ESG goals to investors.  

As investors dedicate trillions of dollars into green, sustainable funds, more companies and investment funds are amplifying their climate and environmental bona fides, according to the article. The SEC, however, is strictly monitoring the truthfulness and fulsomeness of companies’ statements and disclosures to their shareholders to ensure they are not exaggerating their commitment to or achievement of climate related goals. “Last year brought us the perfect storm: money held in sustainable mutual funds and ESG-focused exchange-traded funds rose globally by 53% to $2.7 trillion,” said Wolff. “This, coupled with the increase in companies and funds claiming they were green and ESG focused caught the government’s eye.” On March 21, 2022, the SEC announced proposed rule changes that would require companies to make more extensive climate-related disclosures in their annual reports than those currently suggested. “Any company, investment advisor or fund communicating with investors about its ESG or climate risk bona fides should allocate sufficient resources to familiarize itself with the new rules and proposed rules,” advised Wolff. 

Read the full article here

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