Just because ESG wasn’t mentioned in the SEC’s examination priorities doesn’t mean that ESG regulation is out of mind for the agency.
The Securities and Exchange Commission didn’t mention reviewing the use of environmental, social and governance factors in investment recommendations and strategies as an emphasis of its investment advisor exams in 2024 in a document it released Monday.
That’s a sharp contrast from its priority lists of the last couple of years, in which ESG was prominent. The absence of the topic was first noted by Bloomberg Law.
Even though ESG was excised from the examination preview document, the theme still courses through SEC enforcement and rulemaking.
“It would be a mistake to construe that exclusion as an indicator that ESG is no longer a priority for the SEC,” said Kurt Gottschall, a partner at the law firm Haynes Boone and former director of the SEC’s Denver office.
The agency recently fined a subsidiary of Deutsche Bank $19 million for making misleading statements about incorporating ESG factors into its ESG-integrated actively managed mutual funds and separately managed accounts.
Last year, the SEC brought enforcement actions against Goldman Sachs Asset Management and BNY Mellon for compliance violations involving ESG investing. Those cases are highlighted on an agency webpage devoted to its enforcement task force on climate and ESG issues.
On the rulemaking side of the agency, the SEC recently issued a final regulation designed to combat greenwashing by expanding a rule that requires fund names to reflect their investment strategies. Two other rules are pending — one on public company climate disclosures and another to strengthen ESG disclosures by investment advisors and investment
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