Security and Exchange Commission and Environmental, Social, and Governance
Over the last year and a half, it has seemingly been a rapid fire of developments with respect to environmental policy. For example, in our April 28, 2022, blog, we discussed the settlement of a lawsuit against the Environmental Protection Agency (EPA) by environmental groups that will result in more companies that will require Facility Response Plans.
When it comes to news about per- and polyfluoroalkyl substance (PFAS), there seem to be developments every week (we have a short update below). And with the Biden Administration’s “all-agency approach” involving matters of climate, environmental management is becoming increasingly complex and difficult.
Security and Exchange Commission
Those in charge of environmental management have to watch developments at the Environmental Protection Agency (EPA), as well as state and local regulatory developments. If that is not enough, now they must be mindful of developments at the Security and Exchange Commission (SEC).
A January 2022 article in JD Supra stated, “…over the last year, the SEC has bolstered the ESG (Environmental, Social, and Governance) Task Force by adopting a new ‘all-agency approach’ to tackling climate and ESG matters, including announced rulemaking and the appointment of ESG-friendly new leadership….the ESG Task Force is poised to make a full court press in 2022.”
“Full-Court Press” Results in $1.5 Million Penalty
This “full-court press,” did not take long to work. From a May 23, 2022, announcement from the SEC, “The Securities and Exchange Commission today charged BNY Mellon Investment Adviser, Inc. for misstatements and omissions about Environmental, Social, and Governance (ESG) considerations in making investment decisions for certain mutual funds that it managed. To settle the charges, BNY Mellon Investment Adviser agreed to pay a $1.5 million penalty” (emphasis added).
Will the SEC continue with its “full-court press” regarding ESG funds (Image by seagul from Pixabay)?
The charge by the SEC states that BNY Mellon misled clients into thinking that certain fund investments had undergone ESG quality review, but had not (see, “It Happened! ESG Task Force’s First Enforcement Action).
SEC Seeks to Bolster ESG Fund Rules
Tangential to this was an announcement by the SEC on May 25, 2022, with respect to ESG Funds. ESG Funds are promoted as investing in companies that are “green” or “sustainable.” These types of investments have grown substantially.
According to ESG Today, “The U.S. Securities and Exchange Commission’s (SEC) on Wednesday published new proposed disclosure rules for funds and advisers that claim to integrate ESG factors into their investment products and services, aiming to provide clearer and more consistent information for investors, and to address the risk of greenwashing through the exaggeration or misrepresentation of ESG claims.”
According to the article, in order to use ESG in a fund’s name, at least 80% of the fund’s assets would need to be invested in assets aligned with the ESG investment policy.
While these developments may not directly affect day-to-day responsibilities for EHS Managers, it does add some “weight” to overall management responsibilities.
PFAS Update – All Appropriate Inquiry
In our March 28, 2022, blog, we discussed the intent of the EPA to adopt the new ASTM 1527-21 Phase I Environmental Site Assessments (ESA) Standard as part of the All Appropriate Inquiries Rule. The 1527-21 standard is significant because it lists PFAS as a non-scope consideration.
Based on negative comments received by the EPA, effective May 2, 2022, the EPA officially withdrew its intent to adopt the rule. See “Standards and Practices for All Appropriate Inquiries; Withdrawal.”
Note that by all indications, the EPA will likely classify two PFAS chemicals (PFOA and PFOS) as hazardous substances under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA). This may put at least two PFAS chemicals back “in the mix” for Phase I ESAs.
It’s been a busy time for anyone in charge of environmental matters. With that in mind, if you are interested in a confidential discussion about your facility, including an environmental compliance assessment, contact Jeffrey Bolin, M.S. at 248-932-0228, Ext.125.
This blog was drafted by Alan Hahn. Alan has an undergraduate degree in Environmental Studies and completed a graduate program in Environmental Management. He has worked in environmental management for 45 years and has written hundreds of blogs and articles. His published work includes Michigan Lawyers Weekly, Detroiter, Michigan Forward, GreenStone Partners, Manure Manager Magazine, Progressive Dairy, and HazMat Magazine.
The blog was reviewed by Jeffrey Bolin, M.S. Jeff is a partner and senior scientist at Dragun Corporation. He is a published author, frequent speaker, and expert witness. His expertise in environmental due diligence, PFAS, vapor intrusion, and site assessments has led to projects in the US, Canada, and overseas. See Jeff’s Bio.
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