Jason Daniel Quoted in New Private Markets on SEC’s ESG Risk Alert
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Akin Gump investment management partner Jason Daniel has been quoted in the New Private Markets article “The SEC ESG risk alert explained by lawyers.” The article reports on how a new risk alert from the Securities and Exchange Commission on ESG investing could affect investors and fund managers.
According to New Private Markets, the SEC issues risk alerts in order to provide notice about potential areas of weakness, to clarify a manager’s fiduciary duties and to help remedy them. In this instance, Daniel said, the SEC staff was “interpreting the rules and obligations as they currently exist to apply to those who are claiming to adhere to ESG principles in their investment decisions.”
Daniel said the SEC was asking managers and advisors “to define what ESG is and how you’re interpreting it yourself. There’s no substantive requirement beyond disclosure,” he added. “If you disclose and mitigate those conflicts of interest, you are ok.”
As for whether mandatory ESG considerations should come from the SEC, Daniel stated, “To go the next step and adopt a rule that requires substantive ESG obligations is beyond what the SEC would normally consider. I don’t think the SEC is going to come out tomorrow and say, ‘you shall not invest in companies that are negligent when it comes to the environment.’”
Daniel continued by pointing out that what the SEC has done is “very appropriate and…probably about as far as they could go. The European model of ‘if you’re claiming this level of ESG, then you will do these specific substantive things,’ that’s not the U.S. model.”
To learn more about the SEC’s risk alert on ESG investing, click here to read an Akin Gump client alert.
