The US Securities and Exchange Commission has for a while now been scrutinising managers’ ESG claims during its examination processes (and conducting ESG-specific exams), but it looks like it is upping its game.
In 2022, these exams have become more targeted and sophisticated in the types of information they look for. This is according to a webinar hosted by compliance consultants at ACA Group and featuring Adam Aderton, a former co-chief of the SEC’s Division of Enforcement Asset Management Unit, who is now a partner at law firm Willkie Farr & Gallagher.
Specifically the SEC in 2022 has been looking in more detail at:
- Greenhouse gas emissions: Where managers are factoring GHG emissions data into its processes, examiners are asking (among other things) whether it is measuring scopes 1, 2 or 3; whether GHG data is communicated to investors; for what percentage of the portfolio there is data available; and the method of calculation.
- Industry standards and frameworks: The SEC is zeroing in on voluntary standards and frameworks and, in particular, taking an interest in signatories to the UN-backed PRI. Those who have signed up to such a standard have been asked to provide documentation showing how they integrate those standards into their processes; copies of the initial application material; policies and procedures associated with oversight and adherence to ESG standards.
You can watch the webinar on catch-up and view the materials here.