Climate-Related Disclosures
Investors have been seeking more information related to climate risks that affect the public companies they own.
Hundreds of companies today already are making some climate-risk disclosures, although mostly outside of their public filings, and investors managing tens of trillions of dollars in assets are making investment decisions relying on those disclosures.
The SEC has been working to ensure that investors receive the complete, consistent, and comparable climate-related information they need in public filings to make their investment decisions.
Investors representing literally tens of trillions of dollars support climate-related disclosures because they recognize that climate risks can pose significant financial risks to companies, and investors need reliable information about climate risks to make informed investment decisions.
SEC Chair Gary Gensler
Rulemaking
The Commission has adopted rules to enhance and standardize climate-related disclosures by public companies and in public offerings.
Among the things the final rules require a registrant to disclose: material climate-related risks; activities to mitigate or adapt to such risks; information about the registrant's board of directors' oversight of climate-related risks and management’s role in managing material climate-related risks; and information on any climate-related targets or goals that are material to the registrant's business, results of operations, or financial condition.
ESG Investing
Mutual funds and ETFs that focus on ESG principles have gained popularity with investors. As product offerings increase, it is important that investors have the information they need to understand funds’ ESG claims and choose the investments best for them.
It also is important that firms recommending ESG investments to their clients provide accurate disclosures and follow policies and procedures.
Exam Reviews
The SEC’s Examinations Division encourages market participants promoting ESG investing to current or prospective clients/investors to evaluate whether their related disclosures, marketing claims, and other public statements are accurate and consistent with internal firm practices. Read More
Enforcement Actions
The SEC’s Enforcement Division has a task force in place to root out ESG-related misconduct as investors increasingly rely on climate and ESG-related disclosure and investment.
The SEC files enforcement cases when, for example, a firm fails to follow policies and procedures involving ESG investments or a firm misstates ESG considerations.
Resources
What Is ESG Investing? Learn more about investing in companies based on their commitment to one or more ESG factors.
What Are ESG Funds? Learn more about the questions that investors should ask when considering whether to invest in ESG funds.
Modified: March 7, 2024