Regulatory Outlook | 03.31.21
State Attorney General Threatens to Sue SEC over ESG Disclosures
West Virginia Attorney General Patrick Morrisey has threatened to sue the SEC over its effort to expand ESG disclosures. Morrisey said that mandating ESG disclosures from companies that are not related to their financial performance would represent regulatory overreach and would be unconstitutional because it would not “withstand strict scrutiny” under free speech rights. In a letter Thursday to SEC Acting Chair Allison Herren Lee, Morrisey criticized a recent speech in which Lee said the SEC is considering expanding climate risk and ESG disclosures to meet investor demand. The SEC should concentrate on disclosures that affect financial performance rather than “statements on issues that drive a political agenda,” wrote Morrisey. “Your proposal would in fact create a system with an unlimited number of additional mandatory statements. This is federal overreach and political activism at its worst.”
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