Tackling climate change is back on the agenda in the US, and is a renewed area of focus for the SEC: on 4 March, the SEC announced the creation of a climate and ESG task force in its division of enforcement.
The task force will proactively identify ESG-related misconduct in the context of investor disclosures, in recognition of increased investor appetite for ESG investment strategies, as well as increased investor reliance on climate and ESG-related disclosures. It will initially focus on “greenwashing” by identifying material gaps or misstatements in investor disclosure materials. It will also analyse disclosure and compliance issues relating to fund managers’ – and their funds’ – ESG strategies.
The US is taking a different approach to the EU when it comes to tackling greenwashing in financial products. The US has chosen to enforce existing disclosure rules, rather than introducing new disclosure regulations (such as the EU’s Sustainability Finance Disclosure Regulation (SFDR) and the Taxonomy Regulation). The task force however, promises to be pro-active in measuring up the disclosures made by fund managers (which is not yet the case with most EU regulators). It will be interesting to see how the US approach impacts the quality of investor disclosures and information, compared to the equivalent EU regime.