Regulatory Developments — Federal 

The SEC’s proposed climate disclosures — The Enhancement and Standardization of Climate-Related Disclosures for Investors — may be delayed further and not published until fall 2023. This draft rule, which is immensely far-reaching and complex, and seeks information in an area that had not previously been a focus for the SEC, has been subject to numerous delays. The original draft rule was intended to be issued in October 2021 but ultimately was not published until March 2022. And the draft was originally intended to be finalized before the end of 2022, although subsequent reports suggested that it would be issued in the second quarter of 2023.

Now an even later date — fall 2023 — is being suggested by a former SEC Commissioner. These delays by the SEC mean that the proposed climate disclosure rule will likely not come into effect until 2024 (when it will almost certainly be subjected to legal challenges from interested parties, potentially causing even further delay). But the SEC, as reflected in recent Congressional testimony by Chairman Gensler, remains committed to these proposed mandatory climate disclosures.

State and Local ESG Regulation

Governor DeSantis (R-FL) recently signed into law an anti-ESG bill that is among the most far-reaching of state government efforts to combat ESG principles. This legislation, according to a press release issued by the Florida state government, is designed to (1) "[b]lock the use of ESG in all investment decisions at the state and local level"; (2) "[e]liminate consideration of ESG factors by state and local governments when issuing bonds"; (3) "[p]rohibit state and local governments from using ESG as part of the procurement process"; (4) "[b]an the financial sector from considering so-called 'Social Credit Scores' in banking and lending practices"; and (5) "[s]top[] financial institutions from discriminating against customers for their religious, political, or social beliefs." It is quite possible that this legislation will serve as a model for similar efforts by politically aligned states. The practical impact of such legislation, however, remains to be seen.