Environmental, social and governance (ESG) investment criteria are rapidly being adopted by asset managers around the world, with the E.U. and other regulatory authorities scrambling to keep pace. Although the U.S. still refrains from any mandatory ESG compliance requirements, an undeniable trend toward enacting standards has emerged based on the SEC’s strong stance under Chair Gary Gensler. That approach is not without controversy, however, as multiple current SEC commissioners have issued vehement statements about whether ESG is an area that can be suitably regulated and if the SEC is even qualified for the task. In a two-part guest series, Andrew King, partner at ESG Ventures, outlines the current state of U.S. efforts to regulate ESG and emerging trends to consider. This first article examines the ESG movement through the prisms of the U.S.’ and E.U.’s respective efforts to date, as well as the conflicting views among current SEC commissioners as to the best course for regulating ESG investing. The second article
will analyze the current materiality standard for ESG disclosures, provide tips for how companies can adhere to the requirements and forecast the likelihood of prescriptive SEC guidelines being issued in the future. See “Legal and Compliance Challenges for Global Asset Managers From Disparate ESG Regulations in the U.S. and Europe
” (Feb. 23, 2021).