ESG Issues Remain Major Focus for SEC Investigations
News and Alerts
Brief Introduction
The SEC has yet to finalize their proposals related to ESG disclosure. However, Firms that advertise ESG in their materials should be prepared to provide supporting documentation during Examination.
The Start of SEC Enforcement Related to ESG
- Although ESG proposals are not finalized, the SEC may take enforcement action related to inaccurate treatment of ESG under the finalized Marketing Rule.
- The SEC argues that by investigating whether Firms can substantiate their advertisements related to ESG, and whether customers receive proper disclosures, they are acting under the Marketing Rule.
- It can be expected that the SEC will continue to heavily focus on ESG considering their creation of a Climate and ESG Task Force within the Division of Enforcement.
- Although rules directly related to ESG have yet to be finalized, the actions by the SEC indicate that a Firm’s actions surrounding ESG will continue to be scrutinized.
Vigilant’s Conclusion
As the Marketing Rule will likely be the main support for SEC action at this time until ESG rules are finalized, Firms will likely find success by strictly adhering to the Marketing Rule. This involves creating written policies and procedures that create a culture of compliance surrounding advertising.
Additionally, the use of Marketing Review support can help streamline the process to remain compliant while allowing your staff to focus on your business goals.
If you have concerns of how to prepare for possible SEC examination or are in need of Marketing Review support, please reach out to us.