Thursday, May 13, 2021
The Securities and Exchange Commission (SEC or the Commission) has announced a series of initiatives reorienting the Commission’s agenda to focus on environmental, social, and governance (ESG) issues. In particular, the Commission is gearing up to develop a framework to address ESG disclosures, including climate change risk and diversity and inclusion metrics. According to Chairman Gary Gensler, an ESG disclosure rulemaking is a “top priority.” Accordingly, we expect the Commission could issue a proposed rulemaking regarding such disclosures later this year.
A CLIMATE AND ESG DISCLOSURE FRAMEWORK
On 15 March 2021, then-Acting Chair (now Commissioner) Allison Herren Lee delivered a speech discussing plans to establish an “ESG reporting framework that would complement our financial reporting framework” (ESG Speech).
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As the wave of SPAC IPOs and de-SPAC transactions continues to build, so too has the scrutiny of these transactions from the SEC and the shareholder plaintiff’s bar. On April 8, 2021, the SEC gave its clearest warning yet among a series of recent signals that it plans to intensify its review of de-SPAC transactions. Most recently, the SEC raised the possibility that statements in a de-SPAC transaction proxy statement fall within the IPO exclusion to the Private Securities Litigation Reform Act (“PSLRA”) safe harbor for forward-looking statements. Meanwhile, a SPAC shareholder recently filed suit in the Delaware Court of Chancery alleging that the SPAC’s board and sponsors breached their fiduciary duties in approving a de-SPAC transaction, and argued that the claims should be reviewed under Delaware’s demanding entire-fairness standard due to conflicts posed by the board’s and sponsors’ receipt of founder shar