Photo source: https://www.sec.gov/securities-topics/enforcement-task-force-focused-climate-esg-issues

The U.S. Securities and Exchange Commission (SEC) has disbanded its Climate and ESG Task Force, which was established in March 2021 to combat misleading environmental, social, and governance disclosures. The task force, originally comprising nearly two dozen staffers, played a role in significant enforcement actions against major firms like Goldman Sachs and Deutsche Bank. However, the SEC has faced growing backlash against ESG initiatives, leading to a reduction in focus on these issues, including the removal of ESG from its examination priorities.

Despite the task force’s dissolution, the SEC claims that its expertise will continue to influence enforcement across the agency. Ongoing challenges include unfinished regulations related to workforce management and board diversity disclosures, which are unlikely to be completed before a new presidential administration takes office in January. The SEC remains vigilant against potential ESG-related fraud, even as it distances itself from the term “ESG” amid a conservative-led pushback against such initiatives. Public companies must remain vigilant in monitoring their climate and ESG disclosures, as inaccuracies in these areas can carry significant risks similar to other material misstatements, despite the dissolution of the Task Force.