As investors, advisers, corporations and other stakeholders become increasingly focused on environmental, social and governance (ESG) investments and disclosures, regulators are becoming increasingly concerned with potential “greenwashing,” which Kelly Gibson, Chair of the Securities and Exchange Commission’s (SEC) ESG Task Force, defined as “exaggerating” a “commitment to, or achievement of climate . . . related goals.”
During a discussion with the Environmental Law Institute, Gibson shared that the ESG Task Force will be concentrated on detecting and bringing enforcement actions for greenwashing in the upcoming year. Gibson explained that due to the “dramatic surge in popularity for ESG focused investment funds” without an equally paced development in U.S.-law and ESG criteria, there is a significant risk that investors may be misled by greenwashing.