SEC Commissioner Voices Strong Support for Proposed SEC Climate Disclosure Rule and Related Proposed ESG Disclosure Rules

SEC Commissioner Lizarraga, one of the recent Democratic appointees to the Securities & Exchange Commission, delivered a speech on April 18 at the annual public policy symposium of the North American Securities Administrators Association, an association of state securities administrators.  In this speech, which focused on "critical investor protection issues," Commissioner Lizzaraga identified certain key topics of concern: "climate and ESG disclosures, [] private fund oversight, [] cybersecurity, [and] market resiliency," and highlighted reform efforts undertaken by the SEC to address these issues. 

With respect to "climate and ESG disclosures," Commissioner Lizarraga offered a full-throated defense of not only "the issuer climate rule," but also the SEC's "proposed enhanced ESG disclosures by funds and advisers," and the SEC's "'truth-in-advertising' rule . . . [that] would require funds and advisers to stand behind their ESG claims."  In effect, Commissioner Lizarraga defended the entire range of policy initiatives undertaken by the SEC with respect to ESG (including climate), and justified this approach by stating that "[t]he climate and ESG proposed rules . . . [would] modernize the disclosure framework to keep up with investor demand and to increase transparency in our markets so that investors have the tools they need to allocate their capital."  In other words, the SEC's proposals were providing "standardization and comparability" in response to investor demand, and said investor demand was responding to material risk.  

Notably, Commissioner Lizarraga's defense of these initiatives was the most expansive discussion of any individual issue in this speech, indicating the importance that he (and presumably the Democratic majority among the SEC Commissioners) attach to this issue.  Further, Commissioner Lizarraga's choice to emphasize this array of policy initiatives to an audience of state securities administrators demonstrates the significance attached to these issues, and the fact that--despite recent delays--the Biden Administration apparently intends to implement this aspect of their regulatory strategy.