You know companies face a new and aggressive enforcement regime when shorthand terms, such as “greenwashing,” are adopted prior to the implementation of comprehensive regulations governing disclosure of climate change issues and cyber-incidents.

When these new regulations are adopted, companies will have to develop robust procedures for identifying potential violations of internal reporting and disclosure controls. This will be a difficult process. Along with the new SEC regulations, companies face a steady drumbeat of pressure from stakeholders demanding transparency and accountability on these important issues. Financial and reputational risks can be devastating to a company if violations occur.

Just take the term “greenwashing,” which is defined to include potential misrepresentations, omissions or false statements surrounding environmental social and governance (“ESG”) issues. Rebel investors, employees, shareholders or consumers are ready to jump at any corporate failure to provide accurate information in this high-profile area. Class action lawsuits will be ready at a drop of a dime to challenge corporate leaders, managers and controls when greenwashing occurs. A misstep on any of these issues could undermine a company’s ability to compete in the marketplace as a result of potential violations.

The SEC already has signaled its intention to aggressively pursue investigations in this area. It is clear that once the regulations are issued the SEC will be ready to...

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