The Texas office of the Securities and Exchange Commission (SEC) will be conducting a probe into lenders’ disclosures and their policies on current issues like climate change and gunmakers, Reuters reported Wednesday (Jan. 5), citing unnamed sources familiar with the matter.
The inquiry will reportedly have to do with two Texas laws from 2021, which banned state entities from working alongside companies to discriminate against firearms or fossil fuel companies.
Investors and employees alike have pressured banks to get more into environmental, social and governance (ESG) issues. That has led to eschewing gunmakers and supporting racial equity products, along with pledges to do away with fossil fuel lending.
The SEC has apparently been looking more into the possible conflicts on what underwriters told investors and what they told Texas regulators about what their policies are on doing business with gunmakers and fossil fuel companies.
President Joe Biden has put forward goals of fighting climate change and racial inequality, which has seen the SEC engaging in more scrutiny of investor disclosures on ESG and climate change risks.
The new inquiries have caused some backlash from Republican lawmakers, who worry that some sectors of the economy will now go without credit. The SEC’s Democratic leadership has also been talking about cracking down on public companies that inflate their ESG issues as a ploy to bolster reputations and attract new investors.
Reuters writes that the new conflict shows how the SEC’s enforcement has become ensconced in the various Republican and Democrat partisan fighting on a number of issues.
Related: US SEC Mulls New Rules For Customer Engagement Tactics
Last summer, the SEC was looking into new rules that could’ve come with repercussions for retail brokers, wealth managers and robo-advisers that use digital customer engagement tactics.
The SEC was seeking input on the tools, which have usually been used by financial firms, in an attempt to determine if they need new regulations.
SEC Chair Gary Gensler said changes were “still at the starting gate,” but that legislation might need an upgrade because of the ways artificial intelligence (AI) was being used for predictive analysis, differentiated marketing and behavioral prompts which were intended to boost customer engagement.
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