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The Securities and Exchange Commission (“SEC”) has taken a major step towards exercising its significant power to require companies to disclose greater information relating to ESG and climate impacts.

On March 4, 2021, the SEC announced that it has formed a Task Force focusing on climate and ESG disclosure issues.  The Task Force is a part of SEC’s Division of Enforcement and will be led by Kelly L. Gibson, the Acting Deputy Director of Enforcement.

According to SEC’s press release, the initial focus of the Task Force is two-fold and includes the following:

  • identifying material omissions and misstatements in climate risk disclosures filed by issuers, and
  • analyzing disclosures and compliance issues related to investment advisers’ and funds’ ESG strategies.

Acting Deputy Director Gibson stated that “[p]roactively addressing emerging disclosure gaps that threaten investors and the market has always been core to the SEC’s mission,” and this task force will allow the SEC to better police the market, pursue misconduct, and protect investors.  In addition, the Climate and ESG Task Force will evaluate and pursue tips, referrals, and whistleblower complaints on ESG-related issues, and provide expertise and insight to teams working on ESG-related matters across the SEC Enforcement Division.

The Task Force, along with the recent appointment of Satyam Khanna as the SEC’s first-ever Senior Policy Advisor for Climate and ESG, appears to further the Biden Administration’s commitment to developing a new set of mandatory disclosures focusing on the climate impact of both public companies and their supply chains.  In August 2020, then SEC Commissioner and now Acting SEC Chair Allison Herren Lee criticized the final rule amending Regulation S-K, which outlines financial disclosure requirements for public companies, for being “silent on the topic of climate risk” when “we are long past the point at which it can be credibly asserted that the climate risk is not material.”  She also noted that it is clear that investors are not getting material information on climate risk as evidenced by investors who represent in excess of $29 trillion in assets calling on the SEC directly to issue rules requiring corporate climate risk disclosure.  In conclusion, Acting Chair Lee stated that “the time for silence has passed,” and “[i]t’s time for the SEC to lead a discussion — to bring all interested parties to the table and begin to work through how to get investors the standardized, consistent, reliable, and comparable ESG disclosures they need to protect their investments and allocate capital toward a sustainable economy.”

See Baker McKenzie’s more detailed coverage of the SEC action on ESG here.  The SEC’s statement on the task force can be found here.

Key Takeways:

The prospect of greater SEC disclosure requirements regarding corporate ESG impacts – coupled with a renewed SEC commitment to pursue tips and encourage whistleblower complaints on ESG matters – further increases the risk to companies who have not yet developed risk-based responsible sourcing and ESG compliance programs.  Companies are well-advised to consider the efficacy of current policies, procedures, and other program elements to cover the risk of climate, social, and governance failures both in supply chains and in broader enterprise operations.


Maria Piontkovska is an associate in Baker McKenzie's Los Angeles office. Maria advises clients on reducing anti-corruption compliance risks stemming from operating business in emerging markets and handles internal investigations and related interactions with law enforcement authorities.


Reagan Demas has significant experience working on behalf of companies and investors in emerging markets and high risk jurisdictions. He has managed major legal compliance investigations for a variety of Fortune 500 companies and negotiated settlements before the US Department of Justice, US Securities and Exchange Commission, and other federal and state regulatory entities, obtaining declinations in a number of matters. He has also conducted risk assessments and due diligence in a variety of legal compliance matters for companies across industries, and has worked on the ground evaluating partnerships, investments and other business opportunities worldwide. Reagan has written and spoken extensively on emerging compliance trends, ethics, corruption and doing business in Africa. In 2019, Reagan was selected as a BTI Client Service All Star by corporate counsel in recognition of being a leader in superior client service.