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The United Arab Emirates (“UAE”) hosted the 28th United Nations Climate Change Conference (“COP28”). Experts described COP28 as “the most important COP since the Paris Agreement,”[1] partly due to its location in one of the world’s ten largest oil producing countries.[2] With over 95,000 delegates, COP28 was the largest COP conference to date.[3]Continue Reading Green Bonds and Global Pledges: Unpacking COP28’s Impact

On August 14, 2024, the U.S. District Court for the Western District of Missouri (the “District Court”) issued a decision ordering a permanent injunction against rules promulgated by the Missouri Securities Division, colloquially referred to as Missouri’s “Anti-ESG” Rules, requiring that broker dealers and investment advisers disclose to and obtain written consent from customers if their investment decisions or advice “incorporate[] a social objective or other nonfinancial objective” (the “Rules”).  The District Court held the Rules were preempted by both the National Securities Markets Improvement Act of 1996 (“NSMIA”) and the Employment Retirement Income Security Act of 1974 (“ERISA”).  The District Court also held the Rules violated the First Amendment’s protection against compelled speech and were unconstitutionally vague.  The decision highlights the limits of U.S. state power in policing the social objectives broker dealers and investment advisers incorporate into their practice and, if not overturned on appeal, suggests that broker dealers and investment advisers may face less legislative pushback, at least at the state level, in pursuing environmental, social, and governance (“ESG”) objectives in the future.Continue Reading District Court Holds Missouri’s “Anti-ESG” Rules are Preempted by Federal Law, Violate First Amendment, and are Unconstitutionally Vague[1]

On March 6, 2024, the U.S. Securities and Exchange Commission approved in a 3-2 vote final rules that require most reporting companies to provide certain climate-related information in their registration statements and annual reports filed with the SEC. This memorandum summarizes a portion of the final rules, the amendments to Regulation S-X, as amended (Regulation S-X), under the Securities Act of 1933, as amended (the Securities Act), and the Securities Exchange Act of 1934, as amended (the Exchange Act), that require a new footnote in audited financial statements, analyzes some of the key challenges these requirements may impose and concludes with some general takeaways. This memorandum does not address the GHG emissions and attestation report disclosure requirements or the governance, business, risk and targets disclosure requirements set forth in the final rules’ amendments to Regulation S-K, as amended (Regulation S-K), under the Securities Act and Exchange Act.Continue Reading SEC’s Final Climate-Related Disclosure Rules: A Closer Look at the Climate Note to Audited Financial Statements

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.

EU Corporate Sustainability Reporting Directive

After several years during which the EU’s Corporate Sustainability Reporting Directive (CSRD) had been hotly discussed and anticipated, 2023 saw not only the entry into force of the CSRD itself, but also the adoption and publication of the European Sustainability Reporting Standards (the ESRS).Continue Reading Sustainability Reporting

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.

Companies have identified that the voluntary carbon markets may play an important role in contributing to a reduction in their net greenhouse gas (GHG) emissions, and, therefore, in meeting their GHG emissions reduction goals.  However, they have also exercised caution in embracing the voluntary carbon markets due to complicated standards, carbon credit quality issues and lack of market and pricing transparency.  Since 2020, the Commodity Futures Trading Commission (CFTC) has shown an increasing interest in regulating the voluntary carbon markets, and this interest has culminated in significant developments in 2023, including the Whistleblower Alert, establishment of its Environmental Fraud Task Force, the Second Voluntary Carbon Markets Convening and now the Proposed Guidance Regarding the Listing of Voluntary Carbon Credit Derivative Contracts.  These CFTC initiatives have the potential to address some of the well-known challenges in the voluntary carbon markets, which may lead to a healthier and more robust market.  We begin with a brief overview of the voluntary carbon markets before discussing the CFTC’s recent actions in this area.Continue Reading Voluntary Carbon Markets: Is It the CFTC’s Time to Shine?

As 2024 gets off to a busy start, companies, boards and management teams are facing a host of new and developing business issues and a large array of regulatory developments, from new and growing risks and opportunities from the adoption of artificial intelligence, to ever-changing ESG issues and backlash, as well as enhanced focus on government enforcement and review. As has become a tradition, we have asked our colleagues from around our firm to boil down those issues in their fields that boards of directors and senior management of public companies will be facing in the coming year, yielding focused updates in eighteen topics that will surely feature at the top of board agendas throughout the year.Continue Reading Selected Issues for Boards of Directors in 2024

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.

In June 2023, the U.S. Supreme Court held that Harvard University and the University of North Carolina’s admissions programs, which considered candidates’ race in admission decisions, violated the Fourteenth Amendment of the U.S. Constitution and Title VI of the Civil Rights Act of 1964.  While these decisions, known collectively as SFFA, do not apply to a corporation’s employment decisions, language in the Court’s opinion has led many to speculate as to how the precedent could potentially be expanded to this context.  The Court’s majority noted that the language of Title VII of the Civil Rights Act, which, broadly speaking, bars discrimination in employment decisions, is almost identical to corresponding language in Title VI.  Notably, in writing a concurrence joined by Justice Thomas, Justice Gorsuch observed that Title VII is “[j]ust next door” to Title VI, and noted that the majority opinion tracks the Supreme Court’s prior rulings interpreting “materially identical language in Title VII,” prompting Justice Gorsuch to ask rhetorically whether it makes sense to “read the same words in neighboring provisions of the same statute—enacted at the same time by the same Congress—to mean different things?” Continue Reading How Boards Should Be Thinking about the Supreme Court’s SFFA Affirmative Action Decision

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.

Companies today face more pressure to speak on social and political issues than ever before. With the constant barrage of issues, the consequences of any course of action can be hard to predict. Speaking up can risk backlash for saying the wrong thing, but refraining from speaking at all may no longer be a reliable way to stay above the fray and avoid criticism. Companies may conclude that, when it comes to issues of great importance to their stakeholders, silence is no longer an option. One question that follows for boards and management, then, is whether they can break the silence without breaching their fiduciary duties.Continue Reading Meeting Fiduciary Duties When Speaking Up: A 21st Century Roadmap

On February 9, 2023, NGO ClientEarth sued all eleven members of the board of directors of Shell plc before the English High Court, for allegedly failing to take steps to protect Shell against climate-change-related risks (see our alert memorandum of February 22, 2023). Our follow-up alert memorandum of April 17, 2023, also set out some answers to some common questions on derivative claims in the context of ESG litigation.Continue Reading Derivative Claim Against Shell’s Board by Climate-Change Activist Shareholder is Refused Permission to Proceed