US: SEC Enforcement reportedly looking at ESG disclosures and Texas law....

Last year, the SEC formed a 22 member Climate and ESG Task Force in the Division of Enforcement.  According to a recent report from Reuters, SEC Enforcement is now looking at ESG disclosures by banks in connection with two laws in Texas that ban discrimination against firearms or fossil fuel companies in certain circumstances.  

News of this investigation comes at a time when regulators and private litigants around the world are taking action based on statements alleged to be the product of "greenwashing," in essence, misrepresenting how sustainability-friendly a product or service is.

According to Reuters, the SEC's Fort Worth, Texas office is seeking information from a number of well-known banks, looking to compare what public disclosures say about their ESG policies against what the same banks have said to Texas about doing business with energy and gunmaker companies.

With the SEC likely to propose new rules on climate disclosures this year, news of this inquiry is a reminder of the importance of solid controls around disclosures on ESG-related issues, to ensure not only that they match-up with what a company is actually doing, but also to ensure that public statements about similar topics are consistent.