Trump Administration SEC Withdraws Proposed Anti-Greenwashing Rule

On June 17, the SEC officially withdrew a proposed rulemaking undertaken by the Biden Administration that sought to combat greenwashing in ESG (or similarly labeled funds). Specifically, the proposed rule would have "facilitate[d] enhanced disclosure of ESG issues to clients and shareholders" (according to the SEC) by mandating "more specific disclosures . . . based on the ESG strategies [that funds and advisers] pursue" including that "[f]unds focus[ing] on environmental factors generally would be required to disclose the greenhouse gas emissions associated with their portfolio investments." In essence, the SEC would have required funds to provide disclosures demonstrating that these funds actually conformed to their proclaimed ESG strategy. This rule had been proposed in tandem with the SEC "Names Rule" (which was finalized and entered into effect), each of which sought to address perceived problems with greenwashing in the investment space.