What ESG-Related Disclosures Should the SEC Mandate?

By Jonathan M. Karpoff, Robert Litan, Catherine M. Schrand and Roman L. Weil February 9, 2022 by renholding

The Financial Economist Roundtable (“FER”) met in July 2021 to discuss current efforts to measure and require disclosure of firms’ ESG activities.[1] The views of individual FER members about specific issues often differ, but the consensus was that financial …

ISS Reviews ESG Equity Indices in 2021

By Hernando Cortina January 28, 2022 by renholding

With some exceptions, 2021 was a generally strong year for equity markets around the world. Impressively, passive ESG products such as ETFs garnered significant inflows of over $150 billion dollars and saw asset under management growth of over 80% globally.

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Climate-Risk Disclosures and “Dirty Energy” Transfers: “Progress” Through Evasion

By John C. Coffee, Jr. January 25, 2022 by renholding

At first glance, recent progress towards transparency in corporate climate-risk disclosures seems exceptional. Over 2,000 companies now publish annual reports showing their carbon emissions data (although most self-interestedly omit Scope 3 data). Many (including most recently ExxonMobil) have made a …

Wachtell Lipton Discusses Investor Priorities in 2022

By Andrew R. Brownstein, Steven A. Rosenblum, Sabastian V. Niles and Carmen X.W. Lu January 25, 2022 by renholding

Last year, major investors took unprecedented steps through engagement efforts and proxy voting to demonstrate their commitment to addressing the climate transition and board and workforce diversity and inclusion, with focus given to disclosure and reporting of key ESG metrics …

Reputation and Sustainability: Opportunities for Growth in Emerging Markets

By Dale Herndon and Richard Baskerville January 21, 2022 by renholding

We are witnessing a shift in global economic activity from advanced markets to emerging ones. According to the World Bank Group (2021) Global Economic Prospects report, emerging markets and developing economies (EMDEs) have experienced higher real gross domestic product (GDP) …

Larry Fink’s 2022 Letter to CEOs

By Larry Fink January 20, 2022 by renholding

Dear CEO,

Each year I make it a priority to write to you on behalf of BlackRock’s clients, who are shareholders in your company. The majority of our clients are investing to finance retirement. Their time horizons can span decades.

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Cleary Gottlieb on Navigating a World Where Almost Everyone Is an Activist

By James E. Langston, Kyle A. Harris and Claire Schupmann January 19, 2022 by renholding

In many ways, 2021 was a high-water mark for corporate activism. The levels of traditional shareholder activism rebounded from the lows reached during the early days of the COVID-19 pandemic. M&A activism increased substantially as shareholder activists sought to capitalize …

Financing Sustainable Entrepreneurship

By Paul P. Momtaz and Sasan Mansouri January 13, 2022 by renholding

At least since BlackRock boss Larry Fink’s annual letter to CEOs in 2019, investing in ESG assets has become a major topic among both retail and institutional investors. In a new article, we address the question of how economically attractive …

Wachtell Lipton Discusses Compensation Season 2022

By Jeannemarie O’Brien, Andrea K. Wahlquist, Adam J. Shapiro, David E. Kahan, Michael J. Schobel and Erica E. Bonnett January 11, 2022 by renholding

U.S. companies continue to demonstrate resilience following another year in which the pandemic imposed itself on world events. Although 2021 did not deliver a full reopening, corporate activity thrived in spite of ongoing uncertainty around “return to work,” building on …

Heightened Eligibility Thresholds for Shareholder Proposals: Modernization or Voter Suppression?

By Xinyi Mao December 17, 2021 by renholding

In September 2020, the Securities and Exchange Commission amended Rule 14a-8 of the Securities Exchange Act to increase the eligibility requirements for a shareholder to submit proposals.[1] Rule 14a-8, also called the shareholder proposal rule, governs when a company …

Mandatory vs. Voluntary ESG Disclosure, Efficiency, and Real Effects

By Cyrus Aghamolla and Byeong-Je An December 8, 2021 by renholding

In recent years, several countries have imposed disclosure requirements on public firms for environmental, social, and governance (ESG) performance. These mandates have also been accompanied by the European Union’s wide-reaching Non-Financial Reporting Directive, effective in 2018 (Directive 2014/95/EU). Similar legislative …

Does Sustainable Investing Matter to the Market?

By Claire Economidou, Dimitrios Gounopoulos, Dimitris Konstantios and Emmanuel D. Tsiritakis December 7, 2021 by renholding

The value of an investment is no longer just about financial returns. A growing number of investors and other corporate stakeholders are calling for their money to go toward stocks or funds that are both profitable over the long term …

A Ranking Season Would Help Combat Discrimination by Commercial Banks

By Nizan Geslevich Packin and Srinivas Nippani December 3, 2021 by renholding

Last October, the U.S. Department of Justice (DOJ), the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) launched what they are referring to as an aggressive effort to combat deliberate financial discrimination against …

Strategic Leadership in Corporate Social Responsibility

By Rui A. Albuquerque and Luis M. B. Cabral November 29, 2021 by renholding

Why do corporations, in particular public corporations, adopt corporate social responsibility (CSR) policies? The CSR adage of “doing well by doing good” suggests that a firm can achieve higher financial returns by balancing the goals of different stakeholders. There are …

Milbank Discusses SEC Guidance on Shareholder Proposals and the Way to Regulate Climate Change

By Neil Whoriskey November 24, 2021 by renholding

As a result of the SEC’s most recent Staff Legal Bulletin [1] (“SLB”), shareholder proposals that focus on a “significant social policy” will not be excludable simply because the policy issue is not, in fact, “significant” to the company receiving …

SEC Commissioner Speaks on ESG Risks and Company Accounting Controls

By Caroline A. Crenshaw November 17, 2021 by renholding

Thank you for the kind introduction Kevin [Gould]. It’s a pleasure to be here today at the annual PepsiCo-PwC CPE conference, which I understand is a tradition going back 18 years now. I appreciate the opportunity to speak, and I

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ESG Investing: Why Here? Why Now?

By Jonathan R. Macey November 15, 2021 by renholding

ESG investing is taking the world of finance by storm. Few concepts have come to dominate an academic discipline as quickly as Environmental, Social, and Governance (ESG) has come to dominate the field of corporate law. While certain forms of …

Modernizing ESG and Climate Risk Disclosure

By Virginia Harper Ho November 11, 2021 by renholding

On November 3, timed to coincide with the United Nation’s COP26 climate summit in Glasgow, the IFRS Foundation announced prototype global reporting standards for corporate climate and sustainability disclosures, and the formation of the International Sustainability Standards Board (ISSB) to …

SEC Enforcement Chief Speaks on Regulation Outside the U.S.

By Gurbir Grewal November 10, 2021 by renholding

Good morning, everyone and thank you for inviting me to deliver the Scott Friestad Memorial Keynote address. I didn’t have the privilege of knowing Scott, but in my few months as Director, I’ve frequently heard his name, and I’ve noticed

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Debevoise Discusses the Labor Department’s Proposal on ESG and ERISA

By Lawrence K. Cagney, Jonathan F. Lewis, Douglas M. Hirn and Alison E. Buckley-Serfass October 21, 2021 by renholding

On October 14, 2021, the U.S. Department of Labor (the “DOL”) issued proposed regulations that represent the first step in meeting President Biden’s directive to revise or rescind the recent Trump-era rules addressing a fiduciary’s duties under Section 404 of …

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