In brief - Management and the board should define “long-term” and develop a strategy that is focused not on where the organization “is going” but where it “can go.” - It is essential for an organization’s talent strategy and ESG priorities to be aligned and integrated with the overall strategy. - Boards can help recalibrate the risk framework to focus on a longer-term horizon ...
Engine No. 1’s Total Value Framework is a data-driven approach to investing that puts a tangible value on a company’s environmental, social and governance impacts and ties those impacts to long-term value creation. Interest in environmental, social and governance (ESG) has never been greater, and yet, ESG ratings systems conflict with one another and remain uncorrelated from financial returns. The inability to tie data to actual outcomes has supported shareholders divesting rather than holding a company and engaging when a problem arises...
Private equity firms are making highly visible commitments to address the challenge of sustainability. Market-leading firms, such as The Carlyle Group, EQT, and TPG Capital, now produce sustainability reports and have dedicated executives overseeing sustainability initiatives and embedding sustainability throughout the deal cycle...
Companies traditionally communicate their sustainability activities to stakeholders through large, comprehensive reports, often running more than 100 pages, that go by a number of different names: Corporate Social Responsibility (CSR), Environmental, Social & Governance (ESG), or Sustainability...
Good corporate governance is a bedrock of corporate America, with a central tenet being the board of directors’ role in effectively overseeing and monitoring the firm...
The rapidly growing focus on environmental, social and governance (ESG) matters that marked 2020 continued to shape events for companies operating or based in the U.K. and Europe in 2021. Discussions of ESG are occurring at all levels, from the boardroom to investors to employees, and governments, regulators and companies are all being encouraged to take these matters into consideration...
ESG is a popular topic within the investment community. ISS Market Intelligence conducted interviews with 779 financial advisors between July 27th and August 11th, 2021 in order to learn more about advisor perception and behavior when it comes to ESG investing...
It is no secret that the U.S. Securities and Exchange Commission (SEC) has recently ramped up its focus on environmental, social and governance (ESG) disclosures...
In an important decision this week, the Delaware Court of Chancery permitted a Caremark duty-of-oversight claim to proceed against the directors of the Boeing Company. Stockholder plaintiffs sued Boeing’s board, seeking to recover costs and economic losses associated with the crash of two 737 MAX jetliners...
According to the Capital Asset Pricing Model, the goal of these investors should be to seek to reduce their exposure to “systematic risk” (which is defined as the risk that remains in any portfolio after it is fully diversified)...
Scientists often describe climate change with superlatives. Urgent. Dire. Existential. The superlatives are all bad. Encouragingly, financial economists are devoting more and more attention to the intersection of climate and finance...
Recently a purported shareholder of certain special purpose acquisition companies (SPACs) initiated derivative lawsuits asserting that the SPACs are investment companies under the Investment Company Act of 1940, because proceeds from their initial public offerings are invested in short-term treasuries and qualifying money market funds...
In his remarks before the Principles for Responsible Investment “Climate and Global Financial Markets” webinar on July 28, 2021, SEC Chair Gary Gensler provided insights into what companies might expect from the SEC’s upcoming climate disclosure rules...
In the fifteen years since the passage of the Sarbanes-Oxley (SOX) Act in the U.S., several institutional and regulatory changes have helped reshape boards of directors. During this time, other factors have emerged to place greater pressure on boards as well...
Since the Business Roundtable redefined the Purpose of a Corporation two years ago, we’ve been tracking how Americans think companies are measuring up to this new stakeholder-focused purpose...
Is the local press an effective monitor of corporate misconduct? Examining this question is important as over the last two decades the circulation of local newspapers in the United States has decreased by nearly 50% according to the Pew Research Center...
On August 4, 2021, the U.S. Securities and Exchange Commission (SEC or Commission) announced settled charges against National Beverage Corp. (NBC) relating to NBC’s failure to disclose executive perquisites provided to its CEO. [1] The SEC’s fifth perquisite case in a little over a year, this settlement signals the Commission’s continued focus on undisclosed perks, a priority articulated in 2020...
On July 29, 2021, the U.S. Attorney’s Office for the Southern District of New York and the SEC announced parallel charges against Trevor Milton, founder, former CEO and executive chairman, and largest shareholder of Nikola Corporation, an electric- and hydrogen-powered vehicle and energy company...
Sustainability—both social and environmental—has quickly risen to the top of corporate agendas in recent years...
Director support among U.S.-listed companies is dropping this year as investors expect boards to accelerate their diversity commitments for not only gender, but also racial and ethnic diversity...
On July 29, 2021, the U.S. Attorney’s Office for the Southern District of New York unsealed a securities and wire fraud indictment against Trevor Milton, the founder and one-time chairman of Nikola Corporation (“Nikola”), a pre-revenue electric- and hydrogen-powered vehicle company which went public through a merger with a special-purpose acquisition company (“SPAC”)...
Average support remains high in 2021, currently approximately 90.8% at Russell 3000 companies, reflecting similar averages compared to 2020 in the same period, despite a higher failure rate in 2021 to date compared to 2020...
Shareholder proposals submitted on environmental matters and, in particular, climate-related proposals have increased for the second consecutive year, exceeding even the number of proposals submitted in 2018...
David A. Bell is partner, Ron C. Llewellyn is counsel, and Katherine K. Duncan is partner at Fenwick & West LLP. This post is based on a Fenwick memorandum by Mr. Bell, Mr. Llewellyn, Ms. Duncan, and Ran Ben-Tzur . Today, shareholders are increasingly demanding corporate accountability on a variety of issues, ranging from compensation and human capital management to governance and board diversity, among others...