The SEC’s Climate and ESG Task Force has been criticized by Republican commissioners who believe enforcement in the area would be premature. But Kelly L. Gibson, acting deputy director of the enforcement and head of the agency-wide ESG Task Force, stated that the task force is necessary to recognize evolving investor priorities and that it will continue to operate. And new SEC Chairman Gary Gensler has echoed her sentiments, telling Congress that investors “measured in the trillions of dollars” seek to better understand climate risk issues.

Until a new ESG framework is formally introduced, Gibson maintains that long-standing principles of materiality and disclosure will govern. Namely, “the requirements that issuers’ disclosures be accurate and not misleading, and that funds and advisers adhere to their fiduciary duty.” Gibson has explained that – from a compliance perspective – firms should make sure that “when they do speak on climate or ESG issues that the disclosures are not materially false or misleading [or] omitting material information.”

On April 9, 2021, the SEC added color to Gibson’s advice through a risk alert warning advisers and funds “to be consistent” with their discourse of ESG-related issues. The risk alert indicated that SEC staff observed “potentially misleading statements” being made to investors, and that certain firms engaged in ESG investing without addressing their analyses, decision making, and compliance oversight.

The recent, intensified consideration of ESG consideration follows the March 15, 2021 call by Allison Herren Lee, the SEC’s then-acting Chairwoman, for public assistance to develop ESG standards. Most recently, on May 13, 2021, Chairman Gensler announced that rulemaking around climate risk and human capital disclosures would be “an early focus” of his tenure, in light of investor interest in the areas. Chairman Gensler also indicated his support of the ESG task force, indicating its findings may be implemented sooner than later.

Subscribe to Proskauer’s Corporate Defense and Disputes blog for all of the latest updates on ESG in the world of securities regulation and enforcement.

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Special thanks to our project assistant, Abigail Rubin for her contributions to the post.

Posted in ESG, Securities Law
Tags: climate risk issues, disclosure requirements, environmental disclosures, Environmental_social and corporate governance, ESG, ESG considerations, ESG disclosures, ESG issues, ESG Task Force, investors, public company, Regulators
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Photo of Erica T. Jones Erica T. Jones

Erica Jones is an associate in the firm’s Litigation Department, where her practice encompasses a range of business, regulatory, and corporate governance matters. She has worked extensively in defense of securities class actions, derivative suits, and white collar criminal matters involving investigations by…

Erica Jones is an associate in the firm’s Litigation Department, where her practice encompasses a range of business, regulatory, and corporate governance matters. She has worked extensively in defense of securities class actions, derivative suits, and white collar criminal matters involving investigations by the SEC, DOJ, and state attorneys’ offices. In addition, Erica has advised on antitrust matters involving allegations of price fixing, restraint of supply, monopolization, group boycott, bid rigging, and collusion across industries that include agriculture and health care. She is also a member of the litigation team representing the Financial Oversight and Management Board in the Commonwealth of Puerto Rico’s bankruptcy proceedings.

Erica maintains an active, diverse pro bono practice, with a focus on immigration law, compassionate release and habeas corpus, and racial justice. She is an associate trustee with the Washington Lawyers’ Committee for Civil Rights and Urban Affairs and has been recognized by the District of Columbia Courts’ Capital Pro Bono Honor Roll. Erica was also one of a few women selected to be a Protégée for Proskauer’s Women Sponsorship Program, an initiative for high performing midlevel lawyers that champions emerging leaders.

Erica strives to stay on the cutting edge of developing areas of law through her membership in Proskauer’s COVID-19 Task Force, ESG Working Group, and Private Credit Litigation Group.  Erica’s ability to advocate for her clients is further bolstered by her recent Master’s Degree in Accounting from the University of North Carolina’s Kenan-Flagler Business School with a concentration in Financial Reporting and Analysis.

Prior to joining Proskauer, Erica was an intern with the Department of Justice in the Constitutional and Specialized Tort Litigation Section. Outside of her career in the law, Erica has been featured on Fox’s So You Think You Can Dance, teaching ballroom dance to students at Lighthouse for the Blind.

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