Environmental, Social Governance (ESG), and the Roles of Relevant Stakeholders: What Directors and Officers Need to Know to Do Their Jobs and Minimize Risks

In the current climate of increased social accountability and reputational risk, private and public companies are facing increased pressure from many sources, including their own values, to commit to ESG principles.  As a result, companies are working to create business policies and programs that advance ESG and its goals. In doing so, companies and their directors and officers are starting to face litigation and regulation and pockets of shareholder dissatisfaction resulting from ESG-related disclosures and policies. The pressure to adopt ESG is being brought not only by financial firms, shareholders, and the SEC but also by non-government organizations (NGOs) and consumers. Importantly many non-government organizations have together gained influence with respect to virtually all public companies. They have influenced a wide range of ESG issues including ethics, corruption, use of forced or child labor in supply chains, ethical sourcing, safety, the environment, voting rights, and diversity (including board diversity).

This program will provide an overview of what ESG is and the role which various corporate stakeholders, including directors and officers, have adopted or inherited in advancing ESG principles. The presenters will discuss various influences on private and public companies to support ESG, including not only government legislation and the SEC, but the NASDAQ stock exchange, proxy firms like ISS, financial firms like BlackRock, rating agencies, investor and consumer preferences, and board values. Importantly, on March 21, 2022, the SEC issued proposed expansive disclosure rules which, if adopted, would greatly increase the duties of companies, directors, and officers. These proposed disclosure rules will also be discussed.

This course will also discuss some scenarios in which ESG-related claims have been brought against corporations and their directors and officers, and how directors and officers can deal with shareholder sentiment and activism, while at the same time upholding their fiduciary duties and minimizing ESG-related liability.  

This program will be of benefit to in-house counsel, board members, and senior officers involved in decision-making about ESG corporate policies and disclosures. It will also help outside counsel advising companies and officers about improving ESG internal policies and oversight, drafting ESG disclosures, drafting status reports for companies, or defending against ESG-related litigation.

Learning Objectives: 

1. Identify the different components of ESG

2. Discuss the extent to which influencers speed up the spread of ESG to both public and private companies

3. Describe the evolution of Board diversity regulations and legislation

4. Discuss the roles of corporations, proxy firms, consultants, scientists, shareholders groups, investment firms, law firms, and regulators like the SEC in advancing ESG principles

5. Analyze ESG-related litigation against corporations and their leaders and how it impacts the roles and responsibilities of directors and officers