ESG
Simpson Thacher Discusses Final Labor Department Rule on ESG Investing, Proxy Voting
The U.S. Department of Labor (the “DOL”) recently issued a final rule (the “Final Rule”) that seeks to clarify the circumstances under which a fiduciary subject to ERISA may consider climate change and other environmental, social …
New Challenges to the Internal Affairs Doctrine
A Delaware vice chancellor recently lamented that “Delaware should not be determining employment law for the country and for the world.”[1] That remarkable assertion was a reference to the gradual expansion of the internal affairs doctrine, which provides that …
Stakeholder Engagement
A common argument against stakeholder governance is that it renders managers less accountable while doing little to improve the welfare of stakeholders. Lucian Bebchuk and Roberto Tallarita call this “The Illusory Promise of Stakeholder Governance.” But what if stakeholder governance …
Covington Discusses Responsibly Audited AI and the ESG/AI Nexus
Companies have increasingly leveraged artificial intelligence (“AI”) to facilitate decisions in the extension of credit and financial lending as well as hiring decisions. AI tools have the potential to produce efficiencies in processes but have also recently faced scrutiny for …
Davis Polk Discusses Antitrust Law and ESG Initiatives
In the U.S., some members of Congress and state AGs have advocated for greater antitrust scrutiny of industry-wide ESG initiatives, while other state AGs have argued that such initiatives are procompetitive. In the EU and the U.K., competition authorities have …
From “Corporate Social Responsibility” to “Corporate Social Liability”?
The debate about corporate social responsibility has recently moved into new territory: the establishment of what can be called corporate social liability or CSL. CSL goes beyond classic tort and company law and may result in vicarious liability of …
Wachtell Lipton Discusses Key Issues for Boards in Corporate Governance for 2023
While the world recovers from the worst of the pandemic, the economic, political and social repercussions will continue to play out in ways that, while unpredictable, are in some respects characterized by observable patterns of cause-and-effect and cyclicality. The pendulum …
Wachtell Lipton Discusses ESG and Stakeholder Governance Within the Framework of Fiduciary Duties
Over the past decade, investors, companies, and commentators have increasingly accepted and adopted stakeholder governance as the way to pursue the proper purpose of the corporation and have embraced consideration of environmental, social and governance (ESG) issues in corporate decision-making …
Do Favorable ESG Ratings Lead to More Socially Responsible Behavior?
One of the hottest topics in the business world is ESG ratings, which are designed to measure the environmental, social, and governance risks of a company. The idea is that increased transparency about companies’ ESG risks will motivate those with …
SEC Announces Enforcement Results for FY 2022
The Securities and Exchange Commission today [November 15] announced that it filed 760 total enforcement actions in fiscal year 2022, a 9 percent increase over the prior year. These included 462 new, or “stand alone,” enforcement actions, a 6.5 percent …
Social Washing or Credible Communication?
Investor demand for information about firms’ environmental, social, and governance (ESG) commitments has prompted substantial corporate disclosure of their ESG activities. However, these disclosures often raise questions of “social washing,” where firms make unsubstantiated claims or misrepresent their company as …
Arnold & Porter Discusses State Attorneys General Probes of Banks with Net-Zero Pledges
On October 19, 2022, 19 Republican state attorneys general (the AGs) launched a coordinated investigation by issuing civil investigative demands (CIDs) to six major US banks. The CIDs seek information related to the banks’ membership in the United Nations’ Net-Zero …
Issues to Consider before Mandating ESG Disclosures through Securities Regulation
A recent policy innovation is the use of securities regulations to solve social challenges. It started with mine-labor-safety and conflict-minerals disclosures in the 2010 Dodd-Frank Act and continues today with the Securities and Exchange Commission (SEC) proposal to mandate climate …
The Global ESG Stewardship Ecosystem
In a recent working paper, we highlight a significant transnational dimension to a remarkable corporate governance development: the dramatic increase in attempts by institutional investors to influence how the companies they invest in address material environmental, social, and governance (ESG) …
Rethinking the Value and Emission Implications of Green Bonds
Sustainable investing implies that green assets entail low expected returns because (i) green investors relish holding them and (ii) such assets hedge climate risk by encouraging pro-environmental outcomes. In a new paper, we evaluate whether these predictions are supported by …
ISS Discusses the Rise in Sustainability Officer Pay
Corporations are increasingly adding the role of Chief Sustainability Officer to their executive teams — at pay levels that place them among the top five Named Executive Officers — reflecting rising recognition of environmental, social and governance risk. In this …
Gibson Dunn Discusses Key Considerations for Stakeholders on ESG Ratings
In March 2022, the Financial Times reported a “boom” in environmental, social and governance (ESG) ratings, with a “race to carve out market share in the very lucrative business of providing advice to investors on environmental, social and governance issues”. …
How Regulatory Shaming Can Help Solve Corporate Climate Obstruction
According to conventional wisdom, climate mitigation by governmental regulation should target the reduction of greenhouse gas emissions. Indeed, corporations and industries, including their products and supply chains, are the main source of greenhouse gas emissions, which cause global warming and …
The Blurring Lines between Private and Public Ownership
Public versus private status is a common point of differentiation among companies and can determine, for example, how they are regulated and who can invest in them. Yet many private companies increasingly resemble their public counterparts. This blurring of the …