Updates on Regulation, Trading, and Market Reforms for the Alternative Investment Community

The Investor Advisory Committee Urges SEC to Take Global Lead in Requiring ESG Disclosures

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 established the Investor Advisory Committee (the “IAC”) to advise the Securities and Exchange Commission (“SEC”) to protect investor interests and to promote investor confidence and the integrity of the securities marketplace.  The IAC has held three sessions on the topic of environmental, social, and governance (“ESG”) disclosures between 2016 and 2019 and again in May 2020 urging the SEC to enact disclosure policies for incorporation into a disclosure regime for SEC-registered issuers.

The IAC proports that investors consider certain ESG information to be highly material to their investment and voting decisions, regardless of whether their investment mandates include an “ESG-specific” strategy.  As ESG factors have grown to a “global priority” according to the IAC, it is pressing the SEC to adopt ESG-specific guidelines as non-U.S. regulators have.  If the SEC does not take the lead, it is highly likely that other jurisdictions will impose standards soon that U.S. issuers will be required to follow in view of the flow of investment into the US markets from around the world according to the IAC.

In recent years, the SEC executives have participated in discussions regarding the need for ESG policies and potential risks, benefits and costs associated with ESG-specific disclosure guidance or regulation.  Supporting the proposal for broad ESG policies is IAC Vice Chair and former SEC Chairman Elisse Walter while SEC Chairman Jay Clayton has been taking a hands-off approach to ESG regulation during his tenure.

See “Recommendation of the SEC Investor Advisory Committee Relating to ESG Disclosure” at https://www.sec.gov/spotlight/investor-advisory-committee-2012/esg-disclosure.pdf.

About the author

Debbie represents private investment funds and investment advisers in connection with fund structuring, advertising, private placement procedures, compliance policies and procedures, side letters, placement contracts, related agreements and issues. Debbie’s experience includes private equity funds, venture capital funds complex partnership reorganizations, domestic and offshore hedge funds, Opportunity Zone Funds, real estate investment funds and trusts, EB-5 funds, and large master-feeder structures.  Debbie has extensive experience with private securities offerings and financial products, including through crowdfunding, domestic and international joint ventures, global equity offerings, where she represents placement agents, issuers, broker-dealers, public and private companies, investment banks, financial institutions, private funds, and investment advisers.

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Updates on Regulation, Trading, and Market Reforms for the Alternative Investment Community