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Mintz recently released a quantitative analysis of the SEC’s climate and ESG-focused comment letters issued from July 1, 2021 to March 31, 2023. The article categorizes the comments according to the nine topics identified by the SEC in its sample letter plus one additional topic — “greenwashing” — and considered the qualities of the reporting entities who received these letters to identify key characteristics. Here’s an excerpt from the summary:

Overall, a relatively limited number of these comment letters were issued by the SEC. Specifically, 104 reporting entities received comment letters echoing the topics in the SEC’s Sample Letter, and a further 167 reporting entities received a comment letter relating solely to greenwashing. It should also be noted that an overwhelming majority (86%) of the reporting entities receiving a letter solely concerning greenwashing were “Investment Entities” — funds, trusts, or other vehicles solely focused on investing in other companies or assets, rather than traditional companies.

And, while the SEC has continued to focus on the issue of greenwashing, most of the SEC comment letters concerning the climate change topics identified in the Sample Letter were issued either in September 2021 (when the Sample Letter was published) or in a second burst of activity from May–September 2022 — the SEC does not appear to have inquired about those topics since November 2022. Finally, it is also noteworthy that the reporting entities receiving a comment letter aligned with the topics identified in the Sample Letter were concentrated in the Energy & Transport or Manufacturing sectors — about two-thirds of the total.

The analysis found that once the SEC was sending a comment letter it took an “in for a penny, in for a pound” approach and covered a lot of ground in each.

Overall, it appears that the reporting entities that received questions corresponding to the topics identified in the Sample Letter were usually asked about a majority of those topics, and that Physical Effects, Capital Expenditures, Indirect Consequences, Compliance Costs, and Carbon Offsets were the most frequent climate change topics that were the subject of inquiry.

The findings on greenwashing seem to be the most surprising results of this analysis and possibly the most important as a takeaway, as the SEC’s comment letter focus with respect to climate change will eventually shift to the mandatory climate rules, if and when adopted.

But this analysis also revealed a consistent focus on issues pertaining to greenwashing — and the SEC’s inquiries into greenwashing, while concentrated on Investment Entities, were also spread among a number of Companies in a wide variety of industries. This focus by the SEC, despite the recent decline in the number of letters, may well persist.

– Meredith Ervine