Dozens of companies, including some of the best-known consumer brands, recently signed on to a new system of rules for reporting on environmental, social, and governance (ESG) topics. These charter supporters of the “stakeholder capitalism metrics” have pledged to disclose firm-level information on everything from workplace injuries to greenhouse-gas emissions. While issued by the World Economic Forum’s (WEF) International Business Council — which is not usually popular among advocates of free-market economics — these guidelines are at least voluntary. Whatever Davos-style errors are rolled into this “stakeholder” framework, it demonstrates that government regulation over many of these areas is ultimately unnecessary. Will policy-makers take heed? Before he left the agency at the end of last year, former Securities and Exchange Commission chairman Jay Clayton noted a “growing drumbeat for ESG reporting standards.” Indeed, m
Key Points - Mandatory ESG requirements could be an early priority for SEC chair nominee Gary Gensler, with increasing calls from within the SEC to require material ESG.
Jan 29, 2021
Over the course of five days, world business and political leaders during the World Economic Forum’s Davos Agenda engaged in a deep - and virtual - dive into an economy in crisis, soaring unemployment and debt levels, growing income inequality and climate change.
Given that daunting set of problems, was the prevailing mood one of resolve or despair? Judging from Deloitte’s annual resilience report, it could be the latter or at least a whole lot of worry.
Worry takes center stage at Davos
In a survey of 2,260 private- and public-sector leaders in 21 countries, Deloitte found that most global business leaders still do not feel confident leading through disruption, and even more believe their organizations are ill-prepared to pivot and adapt.
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In his 2020 annual letter to CEOs, Laurence Fink, CEO and Chair of BlackRock, the world’s largest asset manager, announced a number of initiatives designed to put “sustainability at the center of [BlackRock’s] investment approach.” According to Fink’s letter, “[c]limate change has become a defining factor in companies’ long-term prospects.” What’s more, he made it clear that companies needed to step up their games when it came to sustainability disclosure. (See this PubCo post.) At the Northwestern Law Securities Regulation Institute this week, former SEC Chair Mary Schapiro said that, at companies where she was on the board, Fink’s statement had “an enormous impact last year.” Fink has just released his 2021 letter to CEOs, in which he asks companies to disclose a “plan for how their business model will be compatible with a net zero economy.” Will this year’s letter have the same impact?
On January 14, 2021, Laurel Hill Advisory Group
(
Laurel Hill ) and Fasken hosted a
webinar on ESG (environmental, social and governance)
considerations of which companies should be aware for the upcoming
2021 proxy season. The webinar s panelists were David Salmon of
Laurel Hill and Emilie Bundock, Stephen Erlichman and Grant
McGlaughlin of Fasken and was moderated by Gordon Raman of Fasken.
Set out below are some of the comments made by the speakers on the
webinar.
Background
The importance of ESG considerations in today s corporate
governance model has developed over the past 50 years. In the early
1970 s the Milton Friedman view of corporations was the