Capping a busy few weeks putting climate change and ESG issues in the forefront, the Securities and Exchange Commission’s Acting Chair Allison Herren Lee gave a speech on March 15, 2021 at the Center for American Progress entitled “A Climate for Change: Meeting Investor Demand for Climate and ESG Information at the SEC.” Acting Chair Lee’s comments highlighted the SEC’s various work streams and areas of focus, while also looking ahead to what still needs to be accomplished.
Specifically, Acting Chair Lee laid out a framework for how the SEC will look at climate change and ESG from a regulatory perspective:
- Comprehensive ESG disclosure framework for public companies
- A more flexible approach to shareholder proposals
- Increased transparency in proxy voting
- Promoting accountability through SEC examinations and enforcement authority
- Domestic and foreign regulatory cooperation
On the disclosure topic, she requested public comment on climate change disclosure for issuers, noting that the request also seeks input on how climate change should fit within a broader ESG disclosure framework. Acting Chair Lee has also asked the staff to reconsider the prior administration’s approach to shareholder proposals and proxy voting, which is consistent with the Department of Labor’s recent announcement that it would not enforce rules the DOL adopted in 2020 related to ESG investments and proxy voting.
Finally, although Acting Chair Lee did not specifically address asset manager disclosures in her speech, except for a reference to certain investment advisers and funds in the private company context, we believe it is reasonable to assume that any public comments, as well as other agency activity in the ESG space, will inform the SEC’s approach to such disclosures.