Cleary Gottlieb Discusses New EU ESG Disclosure Obligations for Financial Services Firms

By Géraldine Bourguignon, Helena Grannis, Caroline Petruzzi McHale, Ferdisha Snagg and Clara Cibrario Assereto January 19, 2021 by Nisha Chandra

Over a year ago, on December 29, 2019, Regulation (EU) 2019/2088 on sustainability-related disclosures for the financial services sector (the “Sustainable Finance Disclosure Regulation”, or “SFDR”) entered into force. Just a few months remain before key …

Faithful Fiduciaries Have Nothing to Fear from DOL Investment Rule

By Max M. Schanzenbach and Robert H. Sitkoff January 12, 2021 by renholding

Late in the afternoon of the Friday before Election Day, the Department of Labor finalized a rule that requires pension and retirement plan fiduciaries to consider only financial interests when investing plan funds. On its face, the rule seems anodyne. …

Debevoise Discusses Banks and Climate-Change Initiatives

By David Rivkin, Natalie Reid, Samantha Rowe, Matthew Kaplan and Gregory Lyons January 12, 2021 by renholding

In the United States this past year, growing movements for social, racial and environmental justice, and the impact of an unprecedented health crisis, have coincided with a range of institutions increasing their focus on promoting environmental, social and governance (“ESG”) …

Rethinking Corporate Purpose … But Not as One Might Expect

By Paul B. Miller December 23, 2020 by renholding

Corporate purpose is having a moment, as it seems to do each generation or so. The Business Roundtable made waves last year by pivoting away from shareholder centrism in its “redefinition” of corporate purpose. Directors, officers, institutional investors, and others …

The Role of Institutional Investors in Stakeholder Capitalism

By Giovanni Strampelli December 18, 2020 by renholding

Institutional investors are increasingly playing a major role in the shift toward stakeholder capitalism. They are also facing pressure from their clients and others to focus more on ensuring that their investments promote corporate sustainability. Such expectations are reinforced by …

Do Corporate Sustainability and Sustainable Finance Generate Better Financial Performance?

By Ulrich Atz, Tracy Van Holt and Zongyuan (Zoe) Liu December 15, 2020 by renholding

Sustainability in business and environmental, social, or governance (ESG) factors in finance have entered the mainstream. In 2020, the CEO of Blackrock wrote: “Our investment conviction is that sustainability and climate integrated portfolios can provide better risk-adjusted returns to investors.”…

The Rise of International Corporate Law

By Mariana Pargendler December 14, 2020 by renholding

What do the emergence of independent directors in South Korea, the legal reforms on related-party transactions in India, the continued rise of environmental, social, and governance (ESG) factors in the United States, and the global spread of corporate governance codes …

Corporate Stakeholders, Corporate Valuation, and ESG

By Bradford Cornell December 10, 2020 by renholding

In a 1987 paper, available here, we argued that non-investor stakeholders play an important role in influencing financial policy and corporate valuation. We also distinguished explicit claims between a company and its counterparties from what we called implicit claims. …

Biden and the SEC: Some Possible Agendas

By John C. Coffee, Jr. December 2, 2020 by renholding

This is the gossip season, and almost everyone has heard a rumor about who will be the next chair of the SEC. Although I was interviewed by the Biden transition team (for my views, not as a candidate), my sources …

Wachtell Lipton Discusses Workplace Wellness and Employee Mental Health As Investor Engagement Priorities

By Andrea K. Wahlquist, Sabastian V. Niles, Lauren M. Kofke and Carmen X. W. Lu December 2, 2020 by renholding

With the prospect of global vaccines on the horizon, companies worldwide continue to address the challenges of pandemic management and recovery on their businesses, the communities and constituencies they serve and especially on their employees. As companies seek to prioritize …

Is Stakeholder Value an Excuse for Underperfoming Managers?

By Ryan Flugum and Matthew E. Souther November 25, 2020 by renholding

In August 2019, the Business Roundtable released a statement redefining the purpose of a corporation to maximize value “for the benefit of all stakeholders – customers, employees, suppliers, communities, and shareholders.” The statement was signed by 181 CEOs, including Jamie …

Latham & Watkins Discusses Department of Labor Rule on ESG Investing

By Paul A. Davies, Nicola Higgs, Kristina S. Wyatt and Deric Behar November 23, 2020 by Nisha Chandra

On October 30, 2020, the US Department of Labor (DOL) published Financial Factors in Selecting Plan Investments (the Rule) and a related Fact Sheet, a codification of the spirit, if not the exact words, of a controversial proposal issued …

A Critique of the Sustainable Corporate Governance Report from the European Commission

By Mark Roe, Holger Spamann, Jesse Fried and Charles Wang November 9, 2020 by renholding

In July 2020, the European Commission published the “Study on directors’ duties and sustainable corporate governance” by EY. The report purports to find evidence of debilitating short-termism in EU corporate governance and recommends many changes to support sustainable …

Skadden Discusses the Social Factors in ESG

By Helena J. Derbyshire, Louise Batty, Damian R. Babic and Eleanor F. Williams November 9, 2020 by Nisha Chandra

Investors have historically overlooked social factors amid a focus on the environmental and governance counterparts as they assess the merit of an investment. This may have been due in part to the difficulty in quantifying social concerns as drivers of …

Cleary Gottlieb Discusses ESG Regulatory Developments

By Chris Macbeth, Géraldine Bourguignon, Caroline Petruzzi McHale, George Taylor and Clara Cibrario Assereto November 4, 2020 by snehapandya

The last few years have seen a marked worldwide expansion in “ESG”-labelled investment products, bringing sustainable finance into the spotlight as a clear financial industry megatrend. By 2018, investment in sustainable assets in five of the world’s major markets (Europe, …

Columbia’s Millstein Center Presents Global Investor-Director Survey on Climate Risk Management

By Jens Frankenreiter, Sophie L’Hélias, Nina Hodzic, Sneha Pandya and Eric Talley October 30, 2020 by snehapandya

Changes in the global climate are having profound impacts on business operations, governance, and organizational management around the world. Boards of directors are searching for ways to account for these changes as they help guide their organizations, and investors are …

Paul Weiss Discusses Initiatives to Unify ESG Reporting

By Mark S. Bergman, Ariel J. Deckelbaum, Brad S. Karp and Scott P. Grader October 27, 2020 by Nisha Chandra

ESG reporting is now recognized as a significant agenda item in the ESG space. The plethora of different reporting standards has caused concern and confusion, as those responsible for providing disclosure, as well as the intended beneficiaries of the disclosure, …

ESG, Common Ownership, and Systematic Risk: How They Intersect

By John C. Coffee, Jr. September 14, 2020 by renholding

This brief column will assert that three developments that seem unrelated are in fact closely related and may soon impact U.S. corporate governance with the force of a freight train. This column summarizes a longer article just posted by this …

Does Environmental and Social Disclosure Affect Innovation at Companies?

By Brian Gibbons August 26, 2020 by renholding

Companies are typically not compelled to disclose environmental and social (E&S) information because this information does not meet the materiality standard used in many jurisdictions. However, some shareholders have an explicit mandate to screen potential investments based on E&S criteria. …

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