SEC’s Climate & ESG Task Force Issues First Enforcement Action
SEC Claims Mining Company Misled Investors
The U.S. Securities and Exchange Commission’s (SEC or The Commission) Climate and ESG Task Force has issued its first complaint against a NYSE-listed company, Vale S.A., for – among other violations – misleading investors through its environmental, social, and governance (ESG) disclosures and annual sustainability reports.
On April 28, 2022, the SEC charged Vale S.A. with misleading investors about the safety of its dams, prior to the collapse of the Brumadinho dam in January 2019. The complaint alleges that Vale engaged in a host of deceptive practices about the dam’s safety, including a years-long campaign of manipulating dam safety audits and fraudulent stability certifications. The complaint also notes that beyond the loss of human life and the immeasurable environmental harm the dam collapse caused, Vale raised over $1 billion dollars in the US’ debt markets and was actively traded on the NYSE, while intentionally misleading investors about the company’s ESG and economic risks.
The Climate and ESG Task Force’s action against Vale demonstrates that the SEC’s Division of Enforcement is focusing its attention on companies that may have harmed investors through false or misleading statements in their ESG disclosures. While the collapse of the Brumadinho dam is an extreme case, the SEC’s pursuit of it also demonstrates the Division’s willingness to work with other countries and regulatory bodies to build its case, and to investigate potential wrongdoing that occurred several years ago.
This enforcement action sends a strong signal to companies that the SEC is taking a more aggressive enforcement posture around ESG disclosures and claims to investors. It also reinforces the need for companies to be focused and attentive to their ESG disclosures and public claims, to avoid regulatory scrutiny.
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ACA’s ESG Advisory Practice will continue to monitor activity and actions of the SEC’s Climate and ESG Task Force, as well as the SEC’s agency-wide initiatives regarding ESG. ACA will offer additional guidance on these actions as they arise.
To discuss this enforcement action or to hear our team’s perspective on this and other ESG issues, please contact our ESG Advisory Practice.
For questions about this alert, or to find out how ACA can help you meet your regulatory ESG obligations, please reach out to your trusted ESG advisor or subscribe to our alerts.
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