legislation mandating divestment of public assets from fossil fuels, requiring the state, including its $17 billion pension fund and state treasury, to divest itself of assets invested in the fossil fuel industry by January 1, 2026. 8 States are also beginning to consider legislation to create more climate transparency and accountability from major corporations. For example, the California Climate Corporate Accountability Act, being considered by the California Assembly as of June 2022, would be a first-of-its-kind legislation to require annual reporting of greenhouse gas emissions by both public and private companies doing business in California and generating over $1 billion in gross annual revenue. 9 ESG-related proposals and regulations continue to generate strong responses from state and local governments. For example, in many states, lawmakers are introducing legislation and practices which push back on financial institutions that are divesting from fossil fuels. The Russia-Ukraine war and the recent rising cost of fuel prices in the U.S. has illuminated tension between short-term energy needs and long-term plans for energy transition, influencing regulatory decisions and timing. While it is unclear how the priorities will be balanced against the growing ESG movement, it is clear that the pace of ESG regulations is unlikely to slow. Government as a regulator Governments drive action on ESG through regulatory change. Governments have long enacted and upheld regulations addressing issues across the E, S, and G, including different antipollution, resource-use, antidiscrimination, privacy, and labor regulations, among others. Public awareness, social pressures, investor demands, and the priorities and directives of government officials and legislative bodies are expanding regulatory boundaries as they relate to addressing ESG as a whole. In March 2022, for example, the Securities and Exchange Commission released proposed rules, The Enhancement and Standardization of Climate-Related Disclosures for Investors, that would require registrants to provide certain climate-related information, including disclosure of greenhouse gas emissions, in their registration statements and annual reports. The proposed rules are expansive and intended to provide more consistent, comparable, and decision-useful information so that investors can better evaluate the impact of climate-related matters on a registrant. 7 At the state and local level, a number of states and cities have taken steps to implement ESG regulatory frameworks for their pension systems. For example, in June 2021, Maine became the first state to pass In their work to address ESG issues, governments have four distinct roles. While governments’ work on ESG issues as a regulator and policy maker is perhaps the most well known, governments at all levels are making significant changes to their roles as an operator and employer in light of ESG priorities. 7 SEC, The Enhancement and Standardization of Climate-Related Disclosures for Investors (2022), Release Nos. 33-11042; 34-94478 8 ME LD99 (HP 65), An Act To Require the State To Divest Itself of Assets Invested in the Fossil Fuel Industry 9 CA SB-260 Climate Corporate Accountability Act Four roles of governments in addressing ESG issues 9 Environmental, Social, and Governance: Government leadership as a catalyst for success © 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.