The SEC’s Acting Chair, Commissioner Allison Herren Lee, was a vocal critic of the SEC’s approach to environmental, social and governance (“ESG”) matters under former Chair Jay Clayton. She voted against the SEC’s 2020 guidance and amendments to Regulation S-K because they did not go far enough in requiring disclosure from public companies about climate change and diversity metrics, noting that climate risk is a new type of systemic risk of “colossal and potentially irreversible risk of staggering complexity” and arguing that “it’s time to consider how to get investors the diversity information they need to allocate their capital wisely.”  “Consistent, reliable, and comparable disclosures of the risks and opportunities related to sustainability measures, particularly climate risk,” she said, is material information that investors need in their decision-making process.

The Statement on the Review of Climate-Related Disclosure from Commissioner Lee and the ESG Funds Investor Bulletin from the SEC’s Office of Investor Education and Advocacy released last week were thus not surprising. They were also likely only the first in a series of ESG-related actions to come from the SEC.…