On January 17, 2023, the Board of Governors of the Federal Reserve System (“Federal Reserve”) launched its pilot climate scenario analysis exercise (“CSA”) by publishing instructions for the six US banking organizations that will participate.
As part of the CSA, participating organizations will submit data templates, supporting documentation, and responses to qualitative questions to the
In January 2023, the Board of Governors of the Federal Reserve System released a report that reviews the climate action plans of global systemically important banks (“G-SIBs”) and summarizes the progress they are making toward achieving them (“Climate Action Report”).[1] As discussed below, the Climate Action Report can be an useful tool for banks that are developing sustainable financing products and climate risk management processes because it identifies key peer behaviors and widely used resources.
On December 23, 2022, the Federal Acquisition Regulatory Council (“FAR Council”) extended its 60-day comment period an additional 30 days from January 13 to February 13, 2023, for its proposed rule on Disclosure of Greenhouse Gas Emissions and Climate-Related Financial Risk. (We previously provided an in-depth analysis on the proposed rule.)
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On November 22, 2022, the U.S. Department of Labor (the “DOL”) published a regulation entitled “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights” (the “Final Rule”). The Final Rule follows proposed rules regarding ESG investing and proxy voting by plan fiduciaries, issued on October 14, 2021 (the “Proposed Rule”) and amends prior regulations on the same topic issued by the DOL under President Trump in 2020 (the “2020 Rule”).
In the Final Rule, the DOL repeatedly emphasized that the regulation was primarily aimed at removing and remedying the chilling effect on ESG investing by plan fiduciaries created by the 2020 Rule. While the Final Rule takes a more permissive stance on the consideration of climate change and other ESG factors in investment decisions by plan fiduciaries than the 2020 Rule, the DOL cautioned that a plan fiduciary should not subordinate the interests of plan participants and beneficiaries to any collateral benefits (i.e., ESG objectives).
The Final Rule largely tracks the Proposed Rule, with a few notable exceptions summarized below.
Continue Reading DOL Finalizes Rule Regarding ESG Investing and Proxy Voting by Plan Fiduciaries
On November 15, 2022, the U.S. Securities and Exchange Commission (SEC) published a press release providing an overview of its 2022 enforcement activities. The SEC stated that it had filed 760 enforcement actions in fiscal year 2022, which was a 9% increase from last year. The civil penalties, disgorgement, and pre-judgment interest ordered in SEC actions were $6.44 billion, the most in the SEC’s history and almost double the amount from fiscal year 2021. Of the total money ordered, civil penalties, which totaled $4.194 billion, were the highest on record.
Continue Reading ESG continues to be a SEC enforcement focus
On October 31, 2022, the Bureau of Ocean Energy Management (BOEM) within the US Department of the Interior finalized two Wind Energy Areas in the Gulf of Mexico Outer Continental Shelf. This Legal Update provides further detail for companies interested in developing or financing offshore wind projects.
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Interest in ESG investing continues to attract attention globally as policymakers and regulators around the world implement policies and regulations to direct or guide behavior and protect the interests of a wide range of stakeholders. Against this backdrop, we observe a rising challenge to so-called “woke capitalism”, particularly with the recent wave of anti-ESG sentiment
Banking organizations should take note of an announcement last week by the Board of Governors of the Federal Reserve System that it would conduct a climate scenario analysis exercise with six of the largest US banking organizations. This Legal Update provides further detail on this exercise.
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At the Summer 2022 National Meeting of the National Association of Insurance Commissioners (“NAIC”), the Innovation, Cybersecurity, and Technology (H) Committee and its Big Data and Artificial Intelligence (H) Working Group held their first Collaboration Forum session on the topic of algorithmic bias. The Collaboration Forum was established at the Spring National Meeting as a
On August 24, 2022, Texas’ comptroller of public accounts released the list of financial companies subject to divestment by Texas state governmental entities unless the companies cease boycotting energy companies. This Legal Update provides further detail on this action and other states’ anti-ESG provisions and notes the risks for the investment industry and investors.
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