It has been publicly reported that the SEC's Enforcement Division has been "sen[ding] document requests, including subpoenas" to asset managers in connection with ESG marketing. This development is entirely unsurprising, as ESG and climate change issues have been a priority for the SEC under the Biden Administration.

Further, the fact that these actions by the SEC's Enforcement Division are apparently targeting "conventional investment funds that have repurposed themselves as ESG funds" dovetails with the SEC's focus on the phenomenon of "greenwashing," i.e., when organizations make exaggerated or inaccurate claims about the degree to which their investments or activities are environmentally-friendly. This policy focus has included a proposed rule by the SEC (initially proposed in May 2022) that would effectively compel any investment fund claiming to be an ESG fund to demonstrate the accuracy of that label.

Indeed, prior to these actions by the SEC's Enforcement Division, the SEC had also issued a significant number of comment letters to individual reporting companies--mainly investment entities--concerning their disclosures, specifically inquiring about greenwashing. Indeed, from July 1, 2021 through March 21, 2023 fully one hundred and sixty-seven (167) reporting entities received a comment letter concerning greenwashing (of which 86% were investment entities) without reference to any other environmental or climate change issue. (

That the SEC may now be moving towards an "industry sweep" or similar enforcement action with respect to ESG issues and investment funds is consistent with their prior actions, and appears to be a logical next step in a trend of increasing enforcement scrutiny of this subject area.

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