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SEC deprioritizes ESG enforcement (2023)
| Environmental, social, and corporate governance |
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The Securities and Exchange Commission (SEC) publicly named ESG enforcement as one of its top priorities after President Joe Biden (D) took office and has been active on the issue ever since. But the commission’s annual priorities list for 2024 did not mention ESG, indicating the SEC is shifting its compliance priorities:
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The Securities and Exchange Commission is putting advisors on notice that in the coming year its examiners will be probing how firms manage conflicts of interest, how they promote their business through marketing materials, and their compensation arrangements. It isn’t surprising that those are among many compliance areas the SEC’s Division of Examinations has outlined in its annual priorities list, a document that can be read as a compliance road map for advisors, brokers, and other registered entities subject to oversight by the commission. What is more notable this year is what it left off. One conspicuous absence from the 2024 priorities is any mention of how advisors handle investments tied to environmental, social, or corporate governance factors. In last year’s document, the commission included a section on how advisors and funds handle ESG-branded products and strategies, including “whether the funds are operating in the manner set forth in their disclosures” and whether they are “appropriately labeled and whether recommendations of such products for retail investors are made in investors’ best interest.” Despite the shift in priorities, experts believe that the SEC will continue significant enforcement of ESG policies: ESG might not have made this year’s list, but that doesn’t mean the issue has faded from regulators’ attention, according to Joshua Broaded, head of global regulatory compliance at ACA Group, a business consulting firm. He notes that the SEC is in the midst of two rulemakings related to ESG and climate, one regarding corporate disclosures and another involving advisor and fund disclosures, and the commission’s Enforcement Division includes a well-staffed ESG and climate task force. “The SEC continues to focus significant effort on ESG, so the absence from the exam priorities needs to be considered in context,” Broaded says. “It’s reasonable to expect that the SEC and other regulators will continue to focus on ESG despite it not being specifically called out in the exam priorities, just as many other issues were not mentioned.”[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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