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SEC Announces Enforcement Task Force Focused on Climate and ESG Issues

On March 4, 2021, the Securities and Exchange Commission (SEC) announced the creation of the “Climate and ESG Task Force" in the SEC's Division of Enforcement.[1]  The purpose of the Task Force is to “develop initiatives to proactively identify ESG-related misconduct."  The Task Force's initial focus will be to identify “any material gaps or misstatements in issuers' disclosure of climate risks under existing rules."  The Task Force will also “analyze disclosure and compliance issues relating to investment advisers' and funds' ESG strategies."  

In carrying out these responsibilities, the Task Force will coordinate the Enforcement Division's resources to identify potential violations, including through “the use of sophisticated data analysis to mine and assess information across registrants."  In addition, the Task Force will evaluate and pursue tips, referrals, and whistleblower complaints on ESG-related issues, and assist teams working on ESG-related matters across the Enforcement Division.  The SEC's press release also provided a link to the SEC's website “Report Suspected Securities Fraud or Wrongdoing," noting that “tips, referrals and whistleblower complaints on ESG related issues" can be submitted there. 

The Task Force includes 22 members from the SEC's headquarters, regional offices and specialized units within the Enforcement Division.  The Task Force will be led by Acting Deputy Director of Enforcement Kelly L. Gibson, who noted that “proactively addressing emerging disclosure gaps that threaten investors and the market has always been core to the SEC's mission."  The SEC also announced that the Task Force will work closely with other SEC Divisions and Offices, including the Divisions of Corporation Finance, Investment Management, and Examinations. 

The creation of the Climate and ESG Task Force follows a series of announcements by the SEC regarding increased activity on climate change and related matters.[2]  In response to this recent “steady flow of SEC 'climate' statements and press releases," SEC Commissioners Hester Peirce and Elad Roisman issued on the same day a joint public statement titled “Enhancing Focus on the SEC's Enhanced Climate Change Efforts."[3]  Noting that the SEC's disclosure regime has long encompassed climate-related issues, the Commissioners stated, “[w]e assume that the new initiative is simply a continuation of the work the staff has been doing for more than a decade and not a program to assess public filers' disclosure against any new standards or expectations.  After all, the Commission has not voted on any new standards or expectations relating to climate-related disclosure.  The timing of this release—just before many public companies were due to file their annual reports—underscores its apparent function as a re-framing of the ongoing work, rather than the announcement of anything new."

The Republican Commissioners continued, “[w]ouldn't it be more prudent for us to await the results of the Corporation Finance staff's latest review of climate change-related disclosure and the Examinations staff's climate- or ESG-related findings in this new exam cycle before allocating resources to an ESG-specific Enforcement initiative?  Better yet, shouldn't we wait for our Corporation Finance staff to complete its assessment of our existing rules relating to ESG disclosures to find out if they are unclear or in need of updating before we announce an initiative aimed at bringing enforcement actions in this area? . . .  Either way, we must continue to review any alleged securities violations in light of the regulations and guidance in existence at the time of the conduct in question."

As discussed in further detail in our recent client alert “Considerations for Climate Change Disclosures in SEC Reports,"[4] this steady drumbeat of announcements is a clear call for issuers to redouble their evaluation and updates of their climate-related disclosures.  At the same time, while market forces ranging from highly sophisticated analysts that are focusing on ESG-related investments to increased attention on climate risk oversight in proxy statements are already leading to significantly enhanced ESG-related disclosures, the threat of potential SEC enforcement actions based on “emerging disclosure gaps" may have the effect of dissuading some issuers from providing enhanced voluntary disclosures.  As noted in the foregoing client alert, the need for carefully documenting the basis of, and exercising careful legal review over, climate-related disclosures is greater than ever.  


   [1]   Available at

   [2]   See Satyam Khanna Named Senior Policy Advisor for Climate and ESG (Feb. 1, 2021), available at; Allison Herren Lee, Statement on the Review of Climate-Related Disclosure (Feb. 24, 2021), available at; SEC Division of Examinations Announces 2021 Examination Priorities - Enhanced Focus on Climate-Related Risks (Mar. 3, 2021), available at

   [3]   Available at

   [4]   Available at

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