In March 2021, Allison Lee, Acting Chair of the Securities and Exchange Commission (SEC), established an ESG task force to review claims on environmental compliance, many of which could have been characterized as “green washing”.  The activities of the task force were continued under the direction of Gary Gensler, confirmed as the permanent Chair. The task force initiated action against Goldman Sachs, McDonald’s Corp., Activision Blizzard and other companies making direct or implied claims relating to sustainability and environmental benefits. The SEC maintained that unsubstantiated claims had the potential to mislead investors.

Based on the success of the enforcement actions and evidence of more recent compliance the SEC has decided to reassign personnel in the ESG enforcement task force to other activities including claims relating to artificial intelligence.  These have now emerged as a source of misrepresentation by management of companies in violation of SEC rules.