PODCASTS AND OTHER MEDIA

Accelerate ESG Podcast

We also are pleased to announce the launch of Accelerate ESG, a new podcast series that will feature in-depth conversations around global ESG issues. The inaugural Accelerate ESG podcast wraps-up of some of the key developments and resolutions emerging from the 2021 COP26 conference in Glasgow. The podcast features a conversation among climate change and sustainability law veteran and co-leader of the firm’s climate change group Ken Markowitz, who attended COP26; Naboth van den Broek, a partner in the firm’s London office who advises companies and governments on issues at the intersection of international law, policy, government and strategy (and who also attended COP26 with Mr. Markowitz); and partner Stacey Mitchell, who co-leads the firm’s ESG group. Listen to the first edition here.

ESG: UNITED STATES

Attention on ESG issues in the United States continues to be heavily focused on climate-related concerns, including anticipated new rulemaking by the U.S. Securities and Exchange Commission (SEC). As we previously reported, SEC Chair Gensler has publicly indicated that the SEC is in the midst of an effort to develop a robust reporting framework for ESG matters. Chair Gensler’s public statements confirm that the SEC’s yet-to-be revealed approach will extend well beyond sustainability. Consistent with Gensler’s statements and a bill recently reintroduced by congressional Democrats, future rule proposals will include extensive climate-related disclosures (which we discussed in a recent piece) and also are expected to require public companies to provide certain “human capital” disclosures. These disclosures could include, among other things, workforce metrics relating to diversity, turnover rate and a breakdown of the number of full and part-time employees. These initiatives are taking place as various sectors of the economy, and the energy industry in particular, continue to factor ESG considerations into both short- and long-term operations and generating sustainable returns for stakeholders.

As we noted in a recent Q&A published by Thomson Reuters, board diversity has been a prominent issue for investors (including activist investors) for the past decade or so. We have seen some profound steps taken by companies to diversify their boards. Notably, the importance of board diversification has been underscored by initiatives such as the recent SEC-approved Nasdaq Diversity Rule and the adoption by a handful of states and foreign jurisdictions of diversity requirements for boards of directors. Likewise, funds have expressed the expectation to see more women elected to boards of directors and some have stated that they will vote against nominee directors if a board is not committed to diversity. A key point our clients make is that when they talk about diversity, they do not embrace simplistic or symbolic gestures, but are really looking for diversity of experience — people who have different backgrounds and perspectives, in addition to demographic diversity.

During 2021, investors and other stakeholders have continued to insist that boards of directors and management take ESG principles into account as a component of a robust corporate governance framework at public and private companies alike. The SEC’s recent approval of the Nasdaq Diversity Rule and issuance of new guidance governing shareholder proposals underscore the SEC’s focus on the intersection of ESG and corporate governance. Relatedly, proxy advisory firms such as Institutional Shareholder Services (ISS) continue to be responsive to stakeholder demands by continuing to update proxy voting guidelines in a manner consistent with ESG goals such as increasing boardroom diversity.

ESG: EU, UK AND ASIA

The European Union and United Kingdom continue to set the pace in terms of implementing tangible disclosure and other requirements to address ESG considerations. The European Commission continues to adopt and develop legislation to create a comprehensive ESG framework. These initiatives are focused on: tackling climate change and decarbonization (e.g., “Fit for 55” package); building on financial and non-financial disclosure and transparency through frameworks such as Sustainable Finance and Disclosure Regulation and Taxonomy Regulation; fostering sustainable finance (including a “European Green Bond Standard”), which sets out a framework for bonds to fund environmentally sustainable activities; and relating to enhanced due diligence on, and supply chain management of, adverse impacts on human rights, the environment and other social and governance factors (including proposing direct civil liability for failure to comply). Relatedly, the U.K., which is no longer a member of the EU, continues to undertake its own ESG-related rule-making initiatives and recently launched sustainability disclosure requirements for businesses and investors.

Generally speaking, ESG-related regulation in Asian jurisdictions lags behind the United States, EU and U.K. That having been said, there continues to be significant activity in Asia in relation to sustainable finance and the corresponding demand for reliable, verifiable data to support sustainable economic activity. With China, South Korea and Japan all having recently announced ambitious net zero targets, most stakeholders fully expect Asian demand for sustainable financial products to continue expanding at record levels; however, such stakeholders are demanding that regulators across various jurisdictions undertake regulatory initiatives to facilitate standardized reporting with respect to these metrics.

EVENTS