August 7, 2023 | Article

The Securities and Exchange Commission (SEC) has been actively addressing ESG (Environmental, Social, and Governance) issues in recent years, leading to significant changes in corporate disclosures and actions. Investors heavily rely on ESG-related information to make their investment decisions, and the SEC aims to ensure transparency and accurate disclosures of ESG policies, procedures, and actions to empower investors.

Corporations are facing pressures from state regulators and shareholders as they try to incorporate ESG principles. Some state regulators are challenging ESG efforts, claiming they violate antitrust rules or create workplace discrimination. Shareholders are also taking legal actions against corporations that fail to comply with their own ESG policies, with some actions accusing companies of 'greenwashing.' Additionally, some shareholder actions aim to force corporations to provide information that will support ESG-based lawsuits. Litigation under the federal Employee Retirement Income Security Act also challenges a U.S. Dept. of Labor rule that allows retirement plan managers to consider companies' ESG efforts in choosing stocks for portfolios.

Recent SEC actions include the creation of the Climate and ESG Task Force to investigate corporate misconduct and violations related to ESG disclosures and activities. The SEC has taken enforcement actions against companies like BNY Mellon Investment Adviser, Vale S.A., and Goldman Sachs Asset Management for misstatements and gaps in disclosures concerning ESG strategies. The SEC also charged former McDonald's CEO, Stephen J. Easterbrook, for providing false and misleading statements relating to his termination, and McDonald's for failing to provide adequate disclosures regarding the separation agreement between the company and Easterbrook.

In the realm of boardroom diversity, the SEC has approved NASDAQ's new rule requiring listed companies to disclose their board-level diversity statistics and have diverse directors or explain why they lack them. Smaller companies and foreign issuers have some flexibility, and challenges to these rule changes are currently in litigation.

Vega Economics offers expertise in ESG litigation and expert support in various areas, such as deceptive business practices, human rights violations in the supply chain, climate change litigation, and shareholder claims against companies for misstatements and omissions.

A full detailed version of this article, with citations, is available at the link below. For additional inquiries please contact

ESG Challenges for Corporations— Recent SEC Developments