S4:E2 | Keeping Up With ESG | Compliance In Context

The Securities Compliance Podcast: Compliance In Context

Welcome back to the Compliance in Context Podcast! On today’s show, we do a deep dive into the wellspring of legal and compliance issues surrounding the topic of ESG, including an analysis of all the recent rulemaking in this space and what the practical application of these rules could mean for firms and their respective compliance programs. In our Headlines section, we examine the SEC examination priorities for 2023, and finally, we’ll wrap up today’s show with another installment of What’s On My Mind, where an old subway incident can teach us about seeing the extraordinary in the everyday and showing a little appreciation for our compliance officer family.

Show

Headlines

• 2023 Examination Priorities from the SEC Division of Examinations

Interview with Sara Donaldson and Adam Aderton

• Introduction to ESG
• What is the recent impact of ESG on the broader markets?
• What is the rule proposal regarding Enhanced Disclosures by Certain Investment Advisers and Investment Companies about Environmental, Social, and Governance Investment Practices?
• What is the Names Rule proposal discussing rule changes to prevent misleading or deceptive fund names?
• What are the final amendments to Form N-PX and additional proxy voting disclosures?
• What does the active rulemaking in this space tell us about the state of the SEC broadly?
• What are we seeing from the SEC in the ESG enforcement space?
• In applying ESG, how are issues getting visibility, disclosures being drafted, and policies and procedures being written and tested?

What’s On My Mind

• Joshua Bell plays violin in the DC Metro subway
• Finding the extraordinary in the everyday

Quotes

16:34 – “Even if you don’t consider yourself an ESG manager, but you’ve told investors that you consider ESG factors in making investment decisions (perhaps from a financial materiality standpoint), these rules could affect you and scope you in to being an integrational fund manager, depending on how the final rule is adopted.” - Adam Aderton

41: 58 – “Yes, it is helpful because it makes a clearer roadmap in terms of what we need to do and the data needed and the expectations that the SCC has. I think it is onerous, but on the other hand, because it is so detailed, you can just get tripped up on not following one step or not doing a step that you said you were going to do cause it’s in your compliance policy. So it’s a balance, and I can respect the SCC trying to take care of the investors. But on the other hand, it’s putting a lot of work and risk on the investment advisors that are running and managing those firms.” - Sara Donaldson