When the SEC established a Climate and ESG Task Force in March 2021, the agency said that the group would “develop initiatives to proactively identify ESG-related misconduct.” Since that time the Task Force has indeed filed enforcement actions alleging ESG-related misrepresentations. Now the agency has reached a settlement with the Brazil-based mining company Vale, S.A. of the Task Force’s first-filed enforcement action, in connection with alleged misrepresentations in the company’s sustainability report about the safety of the company’s mining dams. In the settlement, the company agreed to pay a total of $55.9 million. The enforcement action and its settlement signify the agency’s increasing focus on ESG-related disclosure and its willingness to pursue enforcement actions using existing procedural mechanisms. A copy of the SEC’s March 28, 2023, press release about the Vale settlement can be found here.


Vale is one of the world’s largest mining companies. The company is based in and has significant mining operations in Brazil. In November 2015, a mining dam, known as the Fundão dam, near the city of Mariana, Brazil, and which was co-owned by Vale, collapsed, resulting in 19 deaths and significant environmental and property damage.

In the wake of the Mariana disaster, the company made a public commitment to dam safety. Among other things, the company vowed “Mariana never again” and publicly declared its “commitment to sustainability” and to achieving “zero harm” to its employees and to surrounding communities. In the months following, the company made a number of public statements purporting to show that it was living up to its commitments.

Unfortunately, on January 25, 2019, the Brumadinho dam collapsed, which killed a total of 270 people and (according to the SEC’s complaint) resulted in the “poisoning the Paraopeba River and its tributaries and causing immeasurable environmental, social and economic devastation.” The Brumadinho dam collapse was, the complaint alleges, “one of the worst mining disasters in history.” In the immediate aftermath of the collapse, the company’s share price declined over 25%.

The SEC Action

As discussed here, on April 28, 2022, the SEC, in an action initiated by the agency’s Climate Change and ESG Task Force, filed an enforcement action in the Eastern District of New York against Vale. According to the SEC’s complaint, in the period between the two dam collapse disasters, the company, while profiting from the associated mine’s production, “intentionally concealed alarming signs of the [Brumadinho] dam’s instability from the investing public and Brazilian authorities.” Vale also “deliberately manipulated multiple dam safety audits; obtained numerous fraudulent stability declarations; and regularly and intentionally misled local governments, communities, and investors about the dam’s integrity.”

Among other things, the complaint alleges that Vale maintained its deception about the safety of the dam by obtaining a series of “fraudulent and deceptive” stability declarations from its retained experts in connection with corrupted audits of the Brumadinho dam,” while at the same time the company was aware of data showing that the dam did not meet even Vale’s own safety standards, “much less international standards for dam safety.”

The SEC’s complaint alleges that the company’s concealment of the “true condition” of the Brumadinho dam caused “Vale’s sustainability reports, periodic filings, and other Environmental, Social, and Governance (ESG) disclosures to be materially false and misleading.”

The Settlement

On March 28, 2023, the SEC announced that the company had agreed to pay a total of $55.9 million to settle the charges in the enforcement action complaint. The settlement amount consisted of a civil penalty of $25 million and disgorgement and pre-judgment interest of $30.9 million. The settlement, which is subject to court approval, also would permanently restrain and enjoin Vale from violations of the Securities Act of 1933 and the Securities Exchange Act of 1934.


When the SEC established the Climate and ESG Task Force, the agency said in its press release at the time that the agency’s “initial focus will be to identify any material gaps or misstatements in issuers’ disclosures of climate risks under existing rules.” The Vale action certainly reflects this aspect of the Task Force’s stated mission. The agency’s enforcement action was specifically focused on alleged misrepresentations in the company’s sustainability statements.

As if to underscore this point, the SEC’s press release concerning the recent settlement quotes SEC Associate Director Mark Cave as saying that the settlement would “levy a significant financial penalty against Vale and demonstrate that public companies can and should be held accountable for material misrepresentations in their ESG-related disclosures, just as they would for any other material misrepresentations.”

It is worth emphasizing here that Vale was not sued here because it was an ESG laggard; indeed, the company voluntarily undertook to publish a sustainability statement, a statement that was not at the time required. Vale got sued because its actions did not match its sustainability claims; you could say that Vale got sued for “greenwashing.” As I have said previously on this site, it is not necessarily the companies that are failing to take the ESG initiative that are attracting claims; the companies getting hit with ESG claims are the ones that are alleged to have overblown their ESG credentials or failed to match their claimed ESG credentials with action.

As the Sidley law firm put it in its April 11, 2023, memo about the recent settlement, the SEC’s action against Vale and the settlement highlight “the SEC’s increasing focus on ESG-related disclosures and demonstrates the SEC’s willingness to bring enforcement actions under the existing disclosure framework where it views ESG-related disclosures to be false or misleading.”

It is worth noting that the Vale action underscores the fact that the SEC considers ESG-related disclosures to be material and that ESG-related disclosures will be, as the law firm memo puts it, “closely scrutinized and considered actionable.” The Vale action also shows that the SEC’s scrutiny will extend beyond period filings and will extend into other ESG-related disclosures, such as, for example in the Vale case, sustainability statements or other climate-related analysis.

There is a particular aspect of the Vale action that should not be overlooked and that is that Vale is domiciled and operates outside the U.S. The company’s ADRs trade on a U.S. exchange but it otherwise exists entirely outside the U.S. The company’s sustainability statement may well have been intended for a domestic audience in its home country, but it was nevertheless scrutinized by the SEC under U.S. securities laws.

The final note about the Vale action is that it highlights the importance for companies, as the law firm memo puts it, to “continually and carefully review their ESG-related disclosures for accuracy and completeness and should maintain disclosure controls and procedures that are designed to ensure the accuracy of their ESG-related disclosures.” This point should not be overlooked. Many companies, in an effort to try to establish their ESG credentials, may fall into the rhetorical trap of making aspirational statements that do not reflect the company’s actual circumstances and operations. The SEC’s action against Vale shows that these kinds of statements will be scrutinized. The agency’s Task Force will seek to hold companies that overstate their ESG credentials accountable.