Tuesday, March 9, 2021
In December 2020, NASDAQ submitted a proposed rule change to the U.S. Securities and Exchange Commission (“SEC”) to add a diversity requirement as a condition for listing on its electronic stock exchange. That proposal would require at least two “diverse” directors or officers and periodic disclosure of aggregate data on gender preference, race, ethnicity, and sexual orientation.
Much earlier, both State Street Investors and BlackRock had called for the appointment of more women to corporate boards and indicated they would not vote for board candidates of companies that had no women on them. In a series of high profile sex abuse cases, which gave rise to the “Me Too” movement, and the sequential deaths of Black Americans killed by police and private violence, which spurred the Black Lives Matter protests, business leaders of all ilks saw it as both necessary AND appropriate to emphasize their commitment to a society that is both
Monday, March 8, 2021
Environmental, social and governance (ESG) matters will increasingly be a priority for the Securities and Exchange Commission (SEC) as evidenced by:
the SEC s announcements last week of the formation of a Climate and ESG task force under the purview of the SEC s Division of Enforcement;
the identification of ESG issues as a 2021 examination priority by the SEC s Division of Examinations on March 3; and
the March 2 Senate confirmation hearing testimony of Gary Gensler, President Joe Biden s nominee to lead the SEC, where Mr. Gensler said that investors increasingly want to see climate risk disclosures.
This follows last month s instruction by Acting SEC Chair Allison Herren Lee that staff of the SEC s Division of Corporation Finance (CorpFin) should augment their focus on climate-related disclosure in public company filings.
Monday, March 8, 2021
On March 4, 2021, the Securities and Exchange Commission announced the formation of a Climate and ESG Task Force in the Division of Enforcement (the “Task Force”). The Task Force will be aimed at detecting ESG-related misconduct so that investors can fully consider these issues in their investment decisions.
Short for “environmental, social and corporate governance,” ESG has become an increasingly hot topic in recent years. As the threat of climate change has risen, more and more investors have begun to factor sustainability into their investment decisions. Similarly, investors today are making a conscious effort to invest in companies whose social policies, such as racial equity and community relations, align with their own values. The creation of this task force signals that the SEC views ESG as a critical piece in the investment decision-making puzzle and that additional safeguards are needed to adequately protect investors.
On March 5, 2021, the SEC release adopting broad changes to rule 206(4)-1 under the U.S. Investment Advisers Act of 1940 was published in the federal register. Commencing November 4, 2022, all advertisements and client solicitations by registered advisers must comply with the revised rule.
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