Environmental, Social and Corporate Governance (ESG)
ESG Corporate Governance
Our experienced Corporate Governance team helps clients understand ESG risks and opportunities. We regularly help companies across industries consider how best to address ESG matters such as how to navigate the competing concerns of shareholders and other stakeholders, including employees and customers, proxy advisory firms, non-government organizations and others.
We help clients:
- Adapt to changing requirements from the SEC, US stock exchanges, the UK Financial Conduct Authority (FCA), the UK Prudential Regulatory Authority (PRA), and other relevant bodies.
- Identify and understand investor perspectives and proxy advisory firm policies.
- Navigate shareholder engagement, shareholder proposals, anti-takeover defenses and emerging governance practices.
- Address interactions with activist shareholders.
- Advise on issues related to diversity, equity and inclusion (DEI) within companies, on boards and in executive ranks.
- Handle key governance issues, including the design and implementation of board governance policies, committee charters, internal controls, disclosure policies and procedures, whistleblower policies, succession planning, and attorney reporting procedures.
- By serving as independent counsel to many audit committees.
ESG Disclosure Requirements
Companies are increasingly being asked to disclose legal and business risks presented by climate change, human capital management and other key ESG topics. This focus on ESG disclosure stems from both changing legal obligations and investor pressure. Our team includes lawyers who formerly held high-level SEC roles and helped develop disclosure requirements and guidelines around climate and board diversity, among other key topics. We harness this experience to advise clients on the full range of ESG disclosures in the United States and Europe, including sustainability, environmental risk management, climate matters, diversity and human capital management, human rights, and supply chain practices.
We advise clients on:
- Navigating new and evolving SEC disclosure standards and expectations around climate, board diversity, human capital management and other key ESG matters.
- Crafting voluntary ESG disclosures and messaging, including in sustainability reports and, increasingly, in documents filed with the SEC.
- Assessing materiality in connection with disclosures around ESG.
ESG Securities Enforcement
The SEC Division of Enforcement announced the formation of its Climate and ESG Task Force in 2021. The Division of Examinations similarly stated that it would prioritize ESG issues during examinations. The SEC is developing data mining strategies and advancing initiatives to proactively identify ESG-related issues, including issues related to climate risk disclosures, proxy voting and shareholder expectations, business continuity planning and climate change, and investment advisors’ and funds’ ESG strategies. This heightened scrutiny on ESG from the SEC in the United States is matched by increased focus by the PRA and the FCA in the United Kingdom and other agencies around the world. Clients must prepare for an uptick in enforcement. Our cross-border team is one of the leading securities enforcement defense firms in the world. We have the depth of experience with global regulatory bodies to guide clients through the enforcement process, including navigating parallel investigations by multiple regulators. We have achieved favorable resolutions at every stage—in informal inquiries and examinations and advocacy before agency decision-makers and during investigations, settlements and hearings where we litigate against the government.
We help clients:
- Navigate the complex universe of securities laws and rules of corporate governance actively investigated and litigated by government agencies and regulatory bodies.
- Respond to investigations by the SEC and other agencies related to the accuracy of disclosures about ESG practices and remediation efforts.
- Analyze developments regarding the interest in ESG that has been articulated by the SEC, the FCA, the PRA and other regulatory bodies to help clients anticipate new enforcement priorities or legal interpretations.
ESG Securities and Shareholder Litigation
ESG-related litigation is already pervasive, with investors making demands on public company boards and pursuing claims against public company directors and officers for allegedly failing to prioritize diversity, human rights and climate change issues despite claiming to do so. While ESG disclosures are not new, the increased attention to these disclosures, and to issues related to climate change and racial and gender equity, means that the topic is likely to attract the private plaintiff’s bar in addition to government agencies and regulatory bodies.
WilmerHale is well equipped to help clients prepare for this scrutiny and defend related litigation—we have represented many public companies in responding to board demands, conducting investigations and defending shareholder litigation based on allegedly deficient ESG practices and disclosures. Indeed, for decades, corporate clients and individuals have turned to us to navigate the complex universe of securities laws and rules of corporate governance actively litigated by private parties. We are recognized as one of the nation’s premier firms for defending major securities class actions and shareholder derivative suits.
We help clients:
- Defend shareholder class claims alleging violations of federal and state securities laws.
- Defend shareholder derivative litigation challenging corporate practices, transactions and disclosures, including those involving alleged ESG concerns.
- Advise boards in responding to shareholder demands, including demands to take remedial action or commence litigation regarding alleged ESG concerns.
- Conduct board investigations.
- Respond to shareholder demands for production of corporate books and records.
ESG Climate Change and Environmental Justice
The changing climate and responses to it have complex and diverse implications for businesses across industries. For instance, some companies will face challenges complying with more stringent emissions regulations, while others must reconsider investment opportunities. In addition, institutional investors, legislators, regulators and the public are sharpening their focus on environmental justice, which often goes hand in hand with assessing emissions and other environmental impacts. Our team helps businesses navigate the current focus on environmental justice and related corporate governance, ethics and compliance, environmental enforcement, and litigation issues. We also have the depth of experience and flexibility to assist clients as they adapt to the impacts of climate change and the broad implications for their operations.
We help clients:
- Assemble and analyze corporate benchmarking information and understand how environmental justice principles can inform business strategy.
- Manage all relevant aspects of project permitting, siting and development, including developing strategies for measuring the social cost of a project’s carbon emissions and completing environmental reviews.
- Evaluate corporate operations to identify related challenges and opportunities.
- Draft, review and implement corporate policies on social and environmental justice.
- Evaluate communications and disclosures related to environmental justice and developing communication strategies.
- Address increased enforcement and litigation risk associated with community impacts.
- Respond to congressional inquiries and regulatory investigations and enforcement actions involving environmental justice concerns.
- Navigate litigation involving claims that implicate environmental justice, working to efficiently settle matters and, if necessary, bringing in our top-tier trial teams to resolve matters in court.
ESG Anti-Discrimination and Equity Issues
Businesses face increasing pressure from regulators, employees, customers, investors and other stakeholders to demonstrate their legal compliance with and/or commitment to anti-discrimination, DEI, and other issues of social importance. Our lawyers help companies and boards across a wide range of industries—including finance and lending, technology and social media, housing, healthcare, professional sports, consumer goods, and nonprofits that include educational and arts institutions—navigate these evolving expectations and related legal, business and policy implications.
We help clients:
- Develop and implement best-in-class anti-discrimination policies, procedures and practices.
- Enhance diversity, equity and inclusion initiatives.
- Design benefit programs that reflect a commitment to DEI.
- Assess corporate culture by conducting culture reviews and equity audits, which may include assessing how a company evaluates, promotes and compensates employees or how a company responds to employee complaints of discrimination.
- Investigate specific incidents of alleged sexual misconduct, racial discrimination and other sensitive allegations.
- Understand and address issues including alleged workplace discrimination, pay equity, fair lending and housing, algorithmic bias, racial equity in technology, environmental justice, and corporate policies and responsibilities for civil rights.
ESG Regulatory and Compliance Counseling
With our deep experience interpreting complex regulatory requirements and developing strategies for compliance, we can help companies in all industries navigate rapidly changing federal, state and international climate- and ESG-focused regulations and guidance. This is particularly true for banks and other financial institutions, which face heightened scrutiny from financial regulators under the Biden Administration’s whole-of-government approach to climate change. We have a deep history handling banking controversies and providing bank regulatory counsel in the United States and abroad, and many of our lawyers bring valuable insights from serving in the SEC, the US Treasury Department and other related agencies. Because of our deep knowledge of regulations and regulatory expectations for rating agencies, benchmark providers and equity research providers, we also provide advice to ESG rating providers on proper governance, the handling of conflicts of interest and related control issues.
We help clients:
- Participate in rulemakings to help shape policy on emerging issues.
- Ensure projects take advantage of state and federal incentives for low- or zero-emissions technologies and facilitate opportunities for public-private partnerships in renewable development.
- Comply with US Federal Trade Commission, Environmental Protection Agency, and state consumer protection laws and regulations related to environmental advertising and marketing (“green” claims), as well as industry benchmarks and best practices.
- Comply with increasingly stringent restrictions on carbon emissions.
- Comply with regulations focused on financial inclusion and anti-discrimination, such as the Community Reinvestment Act, the Equal Credit Opportunity Act and others.
- Comply with the UK Modern Slavery Act and other regulatory regimes related to supply chain ethics and human rights, including in relation to vetting M&A and other transactions.
- Develop proper controls and disclosures around their methodology for assessing the ESG characteristics of companies.
ESG Crisis Management and Strategic Response
Protecting workers in a pandemic. Managing the aftermath of an environmental accident. Weathering scrutiny on investments. ESG-related challenges span a host of issues and can quickly draw intense public and regulatory attention. Relying on our lawyers’ deep government experience and industry insights, our team mobilizes to help clients take charge of even the most difficult situations. And with lawyers who have extensive experience serving on corporate and nonprofit boards, we bring deep insight into how organizations can approach ESG and continue to operate smoothly while navigating complex, fast-moving challenges.
We help clients:
- Navigate multifaceted matters related to ESG concerns, which may include high-stakes litigation, enforcement proceedings by US and international regulators, congressional inquiries or investigations, and strategic needs within the company.
- Conduct sensitive internal investigations, including investigations related to personal relationships, ethical conflicts, potential misuse of inside information and allegations of self-dealing.
ESG Investment Management
Investment advisors, fund sponsors, and registered investment companies and their directors turn to us for advice on their most sensitive and complex regulatory, structuring, litigation, enforcement and transactional challenges. With ESG investing highly visible and in demand, we assist all types of clients as they navigate the complex considerations required throughout the investment decision-making process, disclosure of these strategies and associated risks, and the marketing of ESG products.
Drawing on our extensive, hands-on regulatory and in-house experience, we advise clients on the full range of legal, regulatory and compliance issues affecting the investment management industry.
We help clients:
- Navigate matters relating to nuanced regulatory and disclosure issues.
- Develop products and launch new funds, including funds suitable for ERISA-covered plans.
- Ensure that marketing presentations are developed consistent with regulatory requirements.
- Manage director and advisor fiduciary duties.
- Design, implement and manage compliance programs to take into account ESG products.