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  • Ashleigh C. Swayze, Esq

What’s this we hear about the SEC and ESG?

You may have heard or read about the new administration’s SEC focusing on ESG: Environmental, Social and Governance. The SEC recently issued its 2021 Examination Priorities. In it, ESG and the concept of “sustainability” are mentioned. Primarily, the focus for RIAs appears to be one of disclosure: are you using ESG products? Do you have an ESG strategy of your own? More importantly, do you explain to your clients what those products are, or what that strategy is? Do you explain its purpose? Its limitations?

The above is nothing really new. The SEC and state regulators have always wanted RIAs to explain to clients, through fulsome disclosure, the types of investment strategies they use and the risks of those strategies. What appears to be a different take is in comments related to proxy voting and business continuity. For proxy voting, there seems to be an inference that voting in the “best interests of clients” should include considerations related to climate and ESG. In other words, it’s in everyone’s best interest to pursue leadership changes if that new leadership will better address ESG issues. Therefore, RIAs with proxy voting authority should vote accordingly. With regard to business continuity, the issue is one of preparedness: has the firm addressed the concept of climate related disasters in preparing its plan?


ESG is clearly going to be a significant initiative under the Biden administration’s SEC. Please contact us if you have any questions about how your program fits into this ever-shifting paradigm.





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