How Private Shareholder Engagements on Material ESG Issues Affect Companies

By Rob Bauer, Jeroen Derwall and Colin Tissen August 8, 2022 by renholding

Shareholders have increasingly taken the lead in pushing for corporate sustainability. In 2021, for example, 20 percent of U.S. environmental and social shareholder proposals won over 50 percent of shareholder support, while in 2016 only 3 percent of such proposals …

Stakeholder Capitalism’s Viewpoint Diversity Problem

By Stefan Padfield July 15, 2022 by renholding

Concerns about a lack of viewpoint diversity in stakeholder capitalism have been touched upon in commentary about the SEC’s recent climate change proposal. For those not caught up, the SEC has proposed a rule that would “require registrants to provide …

What the Language of Shareholder Stewardship Can Teach Us

By Dionysia Katelouzou July 13, 2022 by renholding

Stewardship has, along with sustainability, social equality, biodiversity, and climate risk management, emerged in recent years as a favorite buzzword in corporate governance and investment management circles. But the language used by investors to express stewardship objectives and practices varies …

Does the Adoption of Say-on-Pay Laws Affect Firms’ ESG Performance?

By Andrea Pawliczek, Mary Ellen Carter and Rong (Irene) Zhong July 7, 2022 by renholding

Can investors successfully advocate for improved ESG outcomes at their portfolio companies? We examine whether the introduction of say-on-pay (SOP) laws provides investors with a way to increase the extent to which executive compensation is tied to ESG metrics and …

Corporate Criminal Liability for ESG Initiatives Is on Its Way

By J.S. Nelson June 23, 2022 by renholding

The Securities and Exchange Commission (“SEC”) has signaled that it wants to increase enforcement against “greenwashing” – misrepresentation of a company’s environmental actions. It is not yet clear, though, whether these enforcement efforts will expand the risk of corporate criminal …

ISS Discusses Global Crackdown on ESG Greenwashing

By Thomas Harding, William Cowper, Karina Karakulova and Manpreet Singh Sandhu June 22, 2022 by renholding

The meteoric global rise of ESG investing is increasingly being met with an equally ambitious regulatory disclosure regime, and, targeting greenwashing, policymakers are beginning to bare their teeth. In the latest salvo, on 25 May the US Securities and Exchange …

Wachtell Lipton Discusses Stakeholder Capitalism and ESG as Tools for Value Creation

By Martin Lipton, David M. Silk and Carmen X.W. Lu June 16, 2022 by renholding

Recent high profile investigations into greenwashing, the ongoing war in Ukraine and soaring energy costs have prompted questions as to the purpose and value of ESG, and more broadly, stakeholder capitalism. Some have criticized stakeholder capitalism and ESG as “woke” …

Do Investor Reactions Differ Across the Lifecycle of ESG Initiatives?

By Shannon Garavaglia, Ben W. Van Landuyt, Brian J. White and Julie R. Irwin June 14, 2022 by renholding

Firms often take on environmental, social, and governance (ESG) initiatives to increase their sustainability and the positive feelings among investors. However, specific ESG initiatives, like all business initiatives, rarely continue indefinitely, and “pruning” them is an integral part of firms’ …

Don’t Forget the “G” in ESG: The SEC and Corporate Governance Disclosure

By Jennifer O’Hare June 8, 2022 by renholding

In March 2022, the SEC proposed rules (the “Proposed Rules”) that, if adopted, will require public companies to include extensive climate-related disclosures in their periodic reports.[1] According to the SEC, this disclosure will help investors “make informed judgments about …

The ALI’s Restatement of the Corporate Objective Is Flawed

By Eric W. Orts June 6, 2022 by renholding

Almost 30 years after the American Law Institute published the Principles of Corporate Governance, it has launched an effort covering similar ground, this time promising a Restatement of the Law of Corporate Governance.

The difference between the Principles…

Mission Critical ESG and the Scope of Director Oversight Duties

By Roy Shapira June 2, 2022 by renholding

How can shareholders hold directors accountable for paying insufficient attention to the broader interests of society? In the past few years, several ESG issues have become a source of major risk for companies and their shareholders. Even if the behavior …

SEC Chair Gensler on ESG Disclosures Proposal

By Gary Gensler May 27, 2022 by renholding

Today [May 25], the Commission is considering a proposal to improve disclosures by certain investment advisers and funds that purport to take Environmental, Social, and Governance (ESG) factors into consideration when making investing decisions. I am pleased to support this

…

SEC Commissioner Peirce on ESG Disclosures Proposal

By Hester M. Peirce May 27, 2022 by renholding

Thank you, Mr. Chair. A key impetus for today’s [May 25’s] rulemaking[1] is a legitimate concern about the practice of greenwashing by investment advisers and investment companies. This concern is real because advisers can mint money by calling their

…

How Mandatory Corporate CSR Disclosures Affect Investors

By Kirsten Fanning, Richard C. Hatfield and Chez Sealy May 24, 2022 by renholding

Investment in companies that engage in sustainable corporate practices is growing rapidly, with those companies receiving approximately $17 trillion from investors so far in the United States alone. As a result, the majority of public companies now voluntarily disclose environmental, …

Voting for Socially Responsible Corporate Policies

By Matthew C. Ringgenberg May 19, 2022 by renholding

Voting is important in the modern public corporation. Shareholders often vote on corporate referendums, they vote to elect directors, and the directors vote on major corporate policies. Yet, despite the significance of voting, there has been little research exploring whether …

The Rise of ESG and the Role of Inside Counsel

By Silvio Cavallo, Bruno Cova and Mark Howard May 4, 2022 by renholding

ESG, sustainability, and stakeholder capitalism are at the center of the global dialogue on the future of the corporation. They are being driven by an evolving legal and regulatory landscape, market dynamics, and societal expectations. In particular, ESG is increasingly …

Why We Should Keep Teaching Dodge v. Ford Motor Co.

By Stephen M. Bainbridge April 26, 2022 by renholding

The question of corporate purpose has been much in the news of late, triggering renewed attention by legal scholars to corporate social responsibility, ESG, and shareholder value maximization. Many of these scholars have been strongly influenced by the late Lynn …

Do Investors Prefer Women CEOs at Firms Targeted by Activists?

By Scott C. Jackson, Chris Agoglia and Dave Piercey April 22, 2022 by renholding

Shareholder activism is playing a larger role than ever in companies’ decisions about their operations and reporting, with over 4,600 firms targeted worldwide from 2013 to 2018. Shareholder activists can have several motives for going after a company, from trying …

Wachtell Lipton Puts Spotlight on Boards: Spring 2022 Update

By Martin Lipton, Steven A. Rosenblum, Karessa L. Cain and Hannah Clark April 21, 2022 by renholding

The ever-evolving challenges facing corporate boards prompt periodic updates to a snapshot of what is expected from the board of directors of a public company—not just the legal rules, or the principles published by institutional investors and various corporate and …

Arnold & Porter Discusses Today’s SEC Examination Priorities, Tomorrow’s SEC Enforcement Actions

By Christian D. H. Schultz, Jane Norberg, Daniel M. Hawke, Ellen Kaye Fleishhacker and David F. Freeman, Jr. April 14, 2022 by renholding

Rounding out a series of quarter-end announcements from the US Securities and Exchange Commission (SEC), the Division of Examinations (Exams) announced its 2022 examination priorities on March 30, 2022. These priorities reflect SEC Chair Gary Gensler’s stated view that the …

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