Takeaways
The Securities and Exchange Commission's near-term climate change and board diversity rulemaking process heralds what may become a period of significant reform to the SEC's disclosure requirements relating to environmental, social, and governance (ESG) criteria generally.
Mixed signals from the SEC's Commissioners may spell additional uncertainty for market participants.
Issuers and private fund managers can adopt certain measures to prepare for the wave of SEC enforcement and civil litigation regarding ESG issues, including by helping to shape the SEC's agenda through participation in the rulemaking process.
Although the SEC's ESG-related agenda is in its early stages, market participants should pay close attention to the emerging regulatory framework, which often portends both enforcement actions and shareholder litigation. As previously noted here, these regulatory developments call for careful evaluation, particularly in light of widely held expectations that the SEC will move swiftly on climate-related disclosure rulemaking following the conclusion of a notice-and-comment period this summer, as well as on potential rulemaking requiring public companies to disclose workforce metrics, including in relation to diversity.