Yesterday, the Securities and Exchange Commission (SEC) announced a new “Climate and ESG Task Force” to be housed within its Division of Enforcement and to be led by Acting Deputy Director of Enforcement Kelly L. Gibson. Ms. Gibson has served in the SEC’s Philadelphia Regional Office since 2008. She was promoted to Director of that office in February 2020 and named Acting Deputy Director of the Division of Enforcement on February 5, 2021.
According to the SEC’s announcement, the task force “will develop initiatives to proactively identify ESG-related misconduct” with a particular emphasis on climate change. The task force will include 22 members drawn from throughout the Division of Enforcement and will use “sophisticated data analysis to mine and assess information across registrants [in order] to identify potential violations.” A statement from Commissioners Hester M. Pierce and Elad L. Roisman noted that SEC enforcement has always been “rooted in materiality, the touchstone we use in assessing issuer disclosure on all topics, including climate” and emphasized that the SEC has not promulgated “any new standard” on climate and ESG disclosures.
This announcement comes after Acting Chair Allison Herren Lee directed the Division of Corporation Finance to review existing disclosure guidance on climate-related risks and appointed Satyam Khanna to serve as Senior Policy Advisor for Climate and ESG in February. It also came on the heels of the SEC’s Division of Examinations highlighted ESG strategies and disclosures among its 2021 examinations priorities.
Yesterday’s SEC announcement signals that the Commission—now through the Examination Staff and Enforcement Division—has made ESG a top priority with respect to public company, investment adviser and fund disclosures. Given the longstanding industry discussion about these issues, it is unclear how much flexibility the Enforcement Staff with its new ESG related mission will afford companies and other market participants where the Staff views disclosures as deficient.