Enhanced Disclosure Requirements and Potential Multi‑Jurisdictional Considerations Raised by the SEC’s Proposed ESG Rule
In this guest article for Private Equity Law Report, partners Mary Beth Houlihan, Daniel Kahl, Ruth Knox, Alex Farmer, Jennie Morawetz, Diane Blizzard and David Marcinkus discuss the SEC's recently proposed rule that, if adopted, would require private equity sponsors and other SEC registered investment advisers to include new narrative disclosures in their Form ADV, Part 2A brochures on environmental, social and governance (ESG) factors they consider when implementing their investment strategies, as well as report census-like information in Form ADV, Part 1A about their ESG strategies. The authors explore the proposed rule's potential impact on private fund managers, as well as proposed rule amendments for registered funds that have the potential to influence investor and regulator expectations for private funds. They also compare the proposed rule to the E.U.’s Sustainable Finance Disclosure Regulation; discuss the proposed rule’s treatment of greenwashing; and offer tips for how private fund managers can leverage the proposed rule to enhance their compliance policies and processes around ESG to mitigate the greenwashing enforcement risk of today and prepare for the potential regulatory changes of tomorrow.
