Winston’s Environmental Law Update

The Securities and Exchange Commission is working on new regulations. These would mandate climate-related and other Environmental, Social, and Governance disclosures. Onlookers still don’t know when they’ll see a proposed rule from the SEC. However, Chairman Gensler recently tweeted clues on what regulated entities should expect.

A growing number of companies are pledging to achieve net-zero carbon emissions over the coming decades. With this, activists and academics are increasing scrutiny of such claims. Congress is holding hearings examining alleged “greenwashing” by corporations. And activists recently published a report examining the net-zero pledges of specific companies and criticizing the transparency and integrity of many such pledges. Now is the time for companies to revisit their climate, sustainability, and environmental, social, governance (ESG) substantiation and compliance procedures.

Deputy Attorney General Lisa Monaco recently said that the Department of Justice intends to “strengthen the way” that DOJ “respond[s] to corporate crime.” DAG Monaco’s speech and memorandum has important implications for environmental enforcement, including for companies making Environmental, Social and Governance (“ESG”) claims and disclosures.  Monaco specified “three actions” changing prior DOJ policies.

Government regulators around the world are increasing scrutiny of climate-related and other environmental, social, and governance (ESG) claims. Many companies are issuing “sustainability” reports, and voluntarily making ESG claims about social issues such as environmental justice in response to investor demands. But regulators are raising questions about their accuracy and support. We look at recent actions by United States and international regulators.  

State attorneys general are pursuing lawsuits and investigations of alleged inadequate disclosures of climate-related risks.

On May 20, 2021, President Biden signed Executive Order 14030 (EO 14030). Stating that the “intensifying impacts of climate change present physical risk to assets, publicly traded securities, private investments, and companies,” EO 14030 seeks to increase disclosure of climate-related financial risk by both the public and private sector.