Expect a flurry of new ESG rules

The Department of Labor and the Securities and Exchange Commission are poised to advance several rulemakings this spring related to environmental, social and governance investing.

The agencies are expected to move over the next few months — fairly quick by regulatory standards — to contribute to the Biden administration’s focus on addressing climate change. Here’s what’s coming:

• DOL ESG proposal: The DOL last year released a proposal that would encourage the use of ESG factors in selecting investments for retirement accounts. The public comment period ended in December. The agency isn’t expected to make any substantial changes to the proposal before releasing a final rule.

• SEC climate risk disclosure proposal: The SEC is expected to release a proposal that would mandate that stock issuers disclose climate-related risks to their businesses.

• SEC human capital management disclosure proposal: The SEC is expected to release a proposal that would mandate that stock issuers disclose workforce information. This could include diversity, benefits, training and other topics.

• SEC amendments to fund name rules: The SEC is expected to release a proposal that would crack down on so-called greenwashing. This regulation would target mutual funds and ETFs that use clever names promising ESG strategies and then fail to deliver them.

• SEC rules related to investment companies and investment advisers related to ESG factors: The SEC is expected to release a proposal that would address how investment companies and investment advisers market and execute ESG investing strategies. This is another anti-greenwashing proposal to ensure that advisers who tout ESG strategies are giving their clients what they’re paying for.