FEATURED: ESG Memos

SPECIAL FEATURE: The Coming Impact of ESG

Recent months have seen institutional investors and other stakeholders, notably BlackRock and State Street, stressing the importance of comparable and decision-useful ESG disclosures by their portfolio companies.  Such calls follow in the wake of growing interest among investors and other stakeholders in understanding and assessing the performance of companies based on ESG metrics.  While the exact system by which companies will report on ESG issues remains to be determined by the market, it is clear that beginning in 2020, and in the years to follow, companies will be disclosing significant amounts of quantifiable information on a basis that will permit comparisons within and across industries.  This information will be used by companies, investors, asset managers and other stakeholders in real-world business decisions and contexts of all sorts, including relating to M&A, litigation, compensation, public disclosure, competition and antitrust, capital structure and credit markets, and taxation.

The series of memos linked below, recently published by Wachtell, Lipton, Rosen & Katz, touches on many of these critical implications of the growing ESG movement for companies, their boards of directors and management, and all stakeholders.  The memos also examine the growing global push, particularly by major asset managers, and more recently, the World Economic Forum, for standardized ESG reporting metrics and highlight considerations for companies looking to disclose ESG performance.

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ESG UPDATE – The Coming Impact of ESG on M&A

Recent months have seen institutional investors and other stakeholders, notably BlackRock and State Street, stressing the importance of comparable and decision-useful ESG disclosures by their portfolio companies. Such calls follow in the wake of growing interest among investors and other stakeholders in understanding and assessing the performance of companies based on ESG metrics.

ESG UPDATE – ESG Disclosures – Considerations for Companies

Recent months have seen institutional investors, multinational organizations and the private sector emphasize the lack of (and importance of) comparable and decision-useful ESG disclosures. Some of the key issues in considering ESG disclosures are: Choice of Framework and Content. Despite the growing recognition of the need for standardized reporting metrics, companies continue to face a … Continued

ESG UPDATE – ESG Disclosures and Litigation Risk

Originally published on February 19, 2020. The past several years have seen a significant increase in the number of companies making public disclosures concerning environmental, social, and governance (“ESG”) issues. Reflecting this trend, the World Economic Forum (“WEF”) recently released a Consultation Draft of proposed common ESG metrics for companies to consider including in investor … Continued

SPECIAL FEATURE – The Coming Impact of ESG

Recent months have seen institutional investors and other stakeholders, notably BlackRock and State Street, stressing the importance of comparable and decision-useful ESG disclosures by their portfolio companies.  Such calls follow in the wake of growing interest among investors and other stakeholders in understanding and assessing the performance of companies based on ESG metrics.

ESG UPDATE – ESG Metrics and Compensation

Originally published on February 20, 2020. Investors, regulators, and companies have become increasingly focused on environmental, social and governance (“ESG”) issues, with the recent release by the World Economic Forum of a Consultation Draft of common ESG metrics for investor communications highlighting the growing pressure for disclosure of ESG metrics. As the ESG movement continues … Continued

ESG UPDATE – Tax and ESG

Originally published on February 21, 2020. Proponents of enhanced environmental, social and governance (“ESG”) disclosure have identified corporate income tax as a relevant metric. While it is premature to predict how ESG standards in this regard will evolve, a key area of focus is tax arbitrage, including profit-shifting among jurisdictions. Boards should be aware of … Continued

ESG UPDATE – ESG Factors and Antitrust

Originally published on February 25, 2020. Recently, the World Economic Forum (“WEF”) released a Consultation Draft of proposed common standards for corporate disclosure of environmental, social, and governance (“ESG”) factors. The draft proposal highlights the need for a common framework from which to evaluate corporate actions and their impact on ESG factors. While it is … Continued

ESG UPDATE – ESG Performance and the Credit Markets

Originally published on February 26, 2020. The view that it is not only possible to do well by doing good, but that doing good is critical to doing well in the long run, has come to the fore in the investment community. Environmental, social and governance (ESG) issues are, as State Street says, “a matter … Continued

ESG UPDATE – Accelerating ESG Disclosure—BlackRock Nudges Companies Toward a Common Standard (SASB + TCFD)

*Originally distributed on January 15, 2020.  A common concern among companies, investors, asset managers and other stakeholders considering voluntary ESG-related disclosures is the lack of a uniform standard that would permit reliable and consistent comparability.  In yesterday’s annual letter to CEOs, BlackRock’s Chairman and Chief Executive Officer Larry Fink advocated for standardized and accelerated sustainability … Continued

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