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SEC's '21 examination priorities to have more focus on climate-related risks

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According to Market Intelligence, December 2022

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SEC's '21 examination priorities to have more focus on climate-related risks

The U.S. Securities and Exchange Commission's division of examination published its 2021 examination priorities including a greater focus on climate-related risks.

"This year, the division is enhancing its focus on climate and ESG-related risks by examining proxy voting policies and practices to ensure voting aligns with investors' best interests and expectations, as well as firms' business continuity plans in light of intensifying physical risks associated with climate change," said Acting Chair Allison Herren Lee.

The SEC's priorities, which also included a focus on conflicts of interest for brokers and investment advisers, as well as and attendant risks relating to financial technology, provide insights into its risk-based approach, including the areas it believes present potential risks to investors and the integrity of the U.S. capital markets.

Herren Lee has been pursuing a more active role from the regulator on climate and environmental, social and governance issues since her appointment. Most recently, she said the current voluntary disclosure regime for climate and other sustainability issues in the U.S. has failed to produce the level of consistent, comprehensive and comparable information that investors need.

The acting chair had also launched a review of corporate climate-related financial disclosures and plans on Feb. 24 to update a decade-old guidance document and enhance its focus on climate-related disclosure in public company filings, and enhanced the SEC's ESG team with the hiring of Satyam Khanna as a senior policy adviser on ESG issues.