SEC Announces ESG As Examination Priority

Following-up on the extensive new mandatory climate disclosures the SEC issued last week, the SEC has now announced that "ESG" will be the second enforcement priority of its examination division during 2022.  Specifically, the SEC will "focus on . . . whether RIAs and registered funds are accurately disclosing their ESG investing approaches . . . [and] whether the vot[ing of client securities] align[s] with their ESG-related disclosures and mandates, and whether there are misrepresentations of the ESG factors considered or incorporated into portfolio section."  In other words, the SEC is intent on making sure that firms that state they are abiding by ESG principles are living up to their promises.