May 192022

SEC Brings First Enforcement Action Over ESG Disclosures

Allen S. Braddock and Samuel B. Boxerman
, , ,

In late April, the U.S. Securities and Exchange Commission (SEC) brought its first enforcement action over alleged false and misleading claims made in a mining company’s environmental, social, and governance (ESG) disclosures. The complaint relates to the 2019 collapse of the company’s dam that injured hundreds and released 12 million tons of mining waste into the environment. The SEC alleges that the company misled investors about the safety of the dam in its ESG disclosures, investor presentations, and sustainability reports. We provide a more detailed discussion of the allegations in our recent client alert.

This enforcement action follows on the heels of the recent SEC proposed rules on climate-related disclosures; we provided an overview of the rules in late March. The enforcement action shines a light on the need for companies to prepare accurate and vetted sustainability reports and ESG disclosures. As shown in the proposed rules and this enforcement action, the SEC is paying particular attention to ESG-related disclosures, and this enforcement action signals the types of cases the SEC may bring in the ESG-disclosure framework.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.

Allen S. Braddock

abraddock@sidley.com

Samuel B. Boxerman

Washington, D.C.

sboxerman@sidley.com

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