SEC task force to enforce green and ESG rules

The US Securities and Exchange Commission has announced the creation of a task force to enforce rules on financial firms’ climate and environmental, social and governance (ESG) disclosures.

The new group will be part of the SEC’s enforcement division and “will develop initiatives to proactively identify ESG-related misconduct”, the SEC statement says. Kelly Gibson, the acting deputy director of enforcement, will lead the new 22-member team.

The task force’s first priority will be enforce current rules on disclosing climate risks, and to “identify any gaps or mis-statements in issuers’ disclosure of climate risks”, says the statement. The unit will also “analyse disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies”.

“Proactively addressing emerging disclosure gaps that threaten investors and the market has always been core to the SEC’s mission,” Gibson says.

Allison Herren Lee, the SEC’s acting chair, announced on February 24 that she had ordered the corporate finance division to review rules about climate risk disclosure. The review will look at how well businesses comply with existing rules, first adopted in 2010.

The SEC named a senior policy adviser on climate and ESG issues on February 1. Satyam Khanna had served on the transition team for US president Joe Biden and vice-president Kamala Harris, working on issues relating to the Federal Reserve, banking and regulation.

Khanna reports to Lee. He began his career as a lawyer specialising in litigation involving financial firms.

SEC appointee faces Senate committee, talks green issues

The US Senate is currently considering Biden’s nominee to chair the SEC, Gary Gensler. The Senate banking committee questioned Gensler during a confirmation hearing on March 2.

Gensler told the committee that investors want to know more about climate risk. “I think then the SEC has a role to play to bring some consistency and comparability to those guidelines,” he said.

Gensler was head of the Commodity Futures Trading Commission between 2009 and 2014, after being nominated by then-president Barack Obama. Previously, he served in senior positions at the US Treasury in the administration of Bill Clinton.

Democratic senator Sherrod Brown, the committee’s chair, said that the SEC should work at “upgrading climate risk disclosure requirements that are out of date”.

Senator Pat Toomey, the highest-ranking Republican on the committee, said he opposed using the SEC to act on climate regulation. “There are some who want the SEC to stray from its tradition of bipartisanship by using its regulatory powers to advance a liberal social and cultural agenda on issues ranging from climate change to racial inequality,” Toomey said.