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Environmental, Social, and Governance

Overview

Environmental, Social, and Governance (ESG): no longer a “nice-to-have,” but a business imperative. With political sentiments evolving, purchasing behavior reflecting perceptions of corporate responsibility, and increased focus around employee wellness, ESG is a top-of-mind issue for consumers, the C-suite, boards, and investors. Businesses that do not incorporate ESG principles into their core business strategy and execute them stand to lose a lot—including shareholder value, revenue, and public trust and goodwill.

Today, for a company to focus on ESG, it must evaluate both its policies and behaviors against many complex areas including:

  • Climate Change. Transition to renewable or clean energy, reduction of greenhouse gas emissions, net-zero goals, public commitments and related financial risks and opportunities;
  • Workplace Issues. Labor rights, the company’s impact on diverse communities, its internal diversity and inclusion policies, and gender equity (including, among others, pay equity); and
  • Governance Issues. Board governance responsibilities, C-Suite compensation structures, board director election processes, and ethics and compliance program performance, including building a culture of integrity and proactive risk management; and
  • Supply Chain and Procurement Transparency. Environmental impacts (including supply chain and lifecycle decarbonization) and human rights due diligence (including forced labor, environmental rights, and equity considerations).

Crowell & Moring’s global ESG advisory team, comprised of more than 35 lawyers, directors, and consultants, helps organizations understand and manage the potential risks of ESG issues, formulate corporate strategies, implement ESG-focused best practices, and capitalize on the opportunities that arise. As new legal and regulatory frameworks emerge alongside continuously evolving voluntary reporting standards, our team draws from its deep government, policy, and industry experience to help our clients navigate this landscape, maximizing opportunities while minimizing risks.

Areas of Service

Our global team offers comprehensive services to help companies mitigate legal risk, protect their interests, and promote good stewardship, while increasing their growth potential. We work with key opinion leaders outside of industry and build partnerships with respected organizations so that our initiatives and messages are trusted and welcomed by governments. Our ESG team offers:

  • Advertising Assessments and Counseling: Advising on “green claims” and the FTC’s “Green Guides,” sustainability marketing claims, “greenwashing” actions, and policies and practices for compliance, reporting, and litigation defense.
  • Human Capital, Racial Equity, and Civil Rights Audit & Counseling: Analyzing critical ESG exposure actions across all personnel decisions and examining pay equity, representation rates, employment policies, EEO complaint histories, human capital programs, etc. to provide tailored advice to leadership.
  • Forced Labor & Supply Chain Counseling: Advising producers, importers, and exporters on the rapidly evolving laws and regulations, as well as performing risk analyses and facilitating communications with—and enhancing access to—U.S. and international authorities.
  • Climate and Biodiversity Reporting: Advise on voluntary and, increasingly, mandatory reporting requirements regarding GHG emissions, climate-change related impacts, and biodiversity implications of business operations (including transition to renewable or clean energy, net-zero emission and discharge goals, public commitments and related financial risks and opportunities). Evaluate risks and opportunities of climate- and biodiversity-related target-setting and reporting approaches.
  • Environmental Justice Audits: Audit and advise on the environmental justice implications of a company's existing physical footprint and evaluate environmental justice-related risks and opportunities of future projects and permitting needs.
  • Transactions and ESG Due Diligence: Counseling with an ESG lens, on mergers & acquisitions, securities offerings, disclosure requirements, shareholder activism, proxy fights, investor relations matters, providing board governance advice and assessment of ESG risks/compliance for target businesses and funds.
  • Procurement Agreements: Negotiating with suppliers/third-party partners and incorporating key ESG KPIs and T&Cs into agreements such as engineering, procurement, construction, operation, and maintenance contracts.
  • Investigations, Incident Response, and Dispute Resolution: Responding to ESG-related actions brought by authorities on behalf of businesses, boards, or individuals and conducting internal investigations to assess ESG risks.
  • Public Affairs: Creating platforms to shape ESG discussions and their brand narrative, as well as developing local, regional, and international initiatives, coalitions, and partnerships.

Insights

Client Alert | 03.08.24

Two Years After Proposal, SEC Finalizes Narrowed, But Still Controversial, Climate Change Disclosures Rule

On March 6, 2024, the U.S. Securities and Exchange Commission (SEC) voted to finalize a rule that requires regulated issuers to disclose information regarding their greenhouse gas (GHG) emissions and other climate-related information. First proposed in 2022, the final rule has been scaled back in some significant ways from what was initially proposed. Notably, the final rule requires only large accelerated filers and non-exempted accelerated filers to disclose direct and energy-related (Scope 1 and 2)[1] GHGs—and only if such emissions are material to the business strategy, results of operations, or financial condition of a registrant—with no Scope 3 requirement to report on other indirect emissions (Scope 3). By comparison, the proposed rule would also have required Scope 1 and 2 emissions disclosures for all types of regulated entities regardless of materiality, and Scope 3 disclosures required of certain filers if material. The final rule reflects a heightened focus on materiality regarding disclosures of climate-related risks, and adjusts assurance requirements. It also extends the timing of GHG reporting, when required, to at least 2026 (for FY 2025 data) and phases in the assurance requirements. As soon as the SEC voted to finalize the rule, ten states (West Virginia, Georgia, Alabama, Alaska, Indiana, New Hampshire, Oklahoma, South Carolina, Virginia, and Wyoming) filed a petition for review in the Eleventh Circuit challenging the final rule....

Representative Matters

Our experience covers many types of ESG issues, including:

Policy, regulatory, and legislative counseling:

    • Advising an industry association on developing and advancing policy initiatives in the Asia-Pacific region relating to waste management issues and barriers to financing waste management infrastructure.
    • Representing client advocacy positions in international environmental agreement negotiations.
    • Representing an energy infrastructure investor in over 30 acquisitions of renewable energy projects, including the largest wind power facility in the U.S., and advising our client on relevant environmental, energy, real estate and tax due diligence, and regulatory requirements.
    • Monitoring climate change litigation across the United States to advise companies on potential changes in compliance and disclosure obligations.

Risk management and compliance:

    • Advising a global fast food corporation regarding recycling claims applicable to disposable materials used in food packaging.
    • Advising the world’s largest retailer on the development of a new seafood sustainability labeling system for private label frozen seafoods.
    • Counseling a client regarding international and U.S. standards for importation of recyclable wastes from foreign countries.
    • Advising the leading paper industry trade association regarding FTC Green Guides matter, including comparative environmental benefit claims between corrugated paperboard and plastic cartons.
    • Advising a consumer battery manufacturer company regarding “green claims” and labeling relating to its incorporation of recycled materials into batteries.
    • Assisting a global manufacturing company in creating and maintaining a hazardous materials transportation compliance program.
    • Advising one of the nation’s largest beer companies regarding advertising claims relating to renewable energy and “waste-free” status.
    • Advising a Fortune 200 company regarding U.S. Securities and Exchange Commission reporting obligations with respect to environmental liabilities, including penalties and remediation obligations.

Complex Commercial Contracts:

    • Representing a multinational consumer goods company in acquisitions of emerging growth companies offering goods or services focused on natural ingredients and/or sustainability, including assessing risks relating to regulatory compliance, supply chain, and data privacy and cybersecurity.
    • Providing tax counseling on a carbon capture and sequestration project with capital investment of over $200 million that will generate credits under Section 45Q of the Internal Revenue Code.

Crises, investigations, litigation, and alternative dispute resolution:

    • Successfully challenged misleading energy savings claims for the nation’s largest solar energy provider, resulting a landmark NAD decision setting the standards for making such claims.
    • Led investigation on behalf of renewable-fuels compliance monitoring company with material exposure requiring advising C-suite regarding financial disclosures, setting of reserves, and engaging with auditors.    

Public Affairs:

    • Launching the world’s largest public-private partnership to promote ethical business practices for the medical device and biopharmaceutical sectors in the Asia-Pacific.
    • Developing ongoing engagement opportunities with priority governments and securing minister and head of state recognition of the need to improve land-based waste management and reduce leakage of litter into the marine environment.
    • Developing customized initiatives, partnerships and events for industry stakeholders and non-governmental organizations looking to advance environmental sustainability.
    • Supporting C-level executive engagement at the most prominent international institutions and global environmental meetings.

Insights

Client Alert | 03.08.24

Two Years After Proposal, SEC Finalizes Narrowed, But Still Controversial, Climate Change Disclosures Rule

On March 6, 2024, the U.S. Securities and Exchange Commission (SEC) voted to finalize a rule that requires regulated issuers to disclose information regarding their greenhouse gas (GHG) emissions and other climate-related information. First proposed in 2022, the final rule has been scaled back in some significant ways from what was initially proposed. Notably, the final rule requires only large accelerated filers and non-exempted accelerated filers to disclose direct and energy-related (Scope 1 and 2)[1] GHGs—and only if such emissions are material to the business strategy, results of operations, or financial condition of a registrant—with no Scope 3 requirement to report on other indirect emissions (Scope 3). By comparison, the proposed rule would also have required Scope 1 and 2 emissions disclosures for all types of regulated entities regardless of materiality, and Scope 3 disclosures required of certain filers if material. The final rule reflects a heightened focus on materiality regarding disclosures of climate-related risks, and adjusts assurance requirements. It also extends the timing of GHG reporting, when required, to at least 2026 (for FY 2025 data) and phases in the assurance requirements. As soon as the SEC voted to finalize the rule, ten states (West Virginia, Georgia, Alabama, Alaska, Indiana, New Hampshire, Oklahoma, South Carolina, Virginia, and Wyoming) filed a petition for review in the Eleventh Circuit challenging the final rule....

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Professionals

Insights

Client Alert | 03.08.24

Two Years After Proposal, SEC Finalizes Narrowed, But Still Controversial, Climate Change Disclosures Rule

On March 6, 2024, the U.S. Securities and Exchange Commission (SEC) voted to finalize a rule that requires regulated issuers to disclose information regarding their greenhouse gas (GHG) emissions and other climate-related information. First proposed in 2022, the final rule has been scaled back in some significant ways from what was initially proposed. Notably, the final rule requires only large accelerated filers and non-exempted accelerated filers to disclose direct and energy-related (Scope 1 and 2)[1] GHGs—and only if such emissions are material to the business strategy, results of operations, or financial condition of a registrant—with no Scope 3 requirement to report on other indirect emissions (Scope 3). By comparison, the proposed rule would also have required Scope 1 and 2 emissions disclosures for all types of regulated entities regardless of materiality, and Scope 3 disclosures required of certain filers if material. The final rule reflects a heightened focus on materiality regarding disclosures of climate-related risks, and adjusts assurance requirements. It also extends the timing of GHG reporting, when required, to at least 2026 (for FY 2025 data) and phases in the assurance requirements. As soon as the SEC voted to finalize the rule, ten states (West Virginia, Georgia, Alabama, Alaska, Indiana, New Hampshire, Oklahoma, South Carolina, Virginia, and Wyoming) filed a petition for review in the Eleventh Circuit challenging the final rule....

Insights

Client Alert | 03.08.24

Two Years After Proposal, SEC Finalizes Narrowed, But Still Controversial, Climate Change Disclosures Rule

On March 6, 2024, the U.S. Securities and Exchange Commission (SEC) voted to finalize a rule that requires regulated issuers to disclose information regarding their greenhouse gas (GHG) emissions and other climate-related information. First proposed in 2022, the final rule has been scaled back in some significant ways from what was initially proposed. Notably, the final rule requires only large accelerated filers and non-exempted accelerated filers to disclose direct and energy-related (Scope 1 and 2)[1] GHGs—and only if such emissions are material to the business strategy, results of operations, or financial condition of a registrant—with no Scope 3 requirement to report on other indirect emissions (Scope 3). By comparison, the proposed rule would also have required Scope 1 and 2 emissions disclosures for all types of regulated entities regardless of materiality, and Scope 3 disclosures required of certain filers if material. The final rule reflects a heightened focus on materiality regarding disclosures of climate-related risks, and adjusts assurance requirements. It also extends the timing of GHG reporting, when required, to at least 2026 (for FY 2025 data) and phases in the assurance requirements. As soon as the SEC voted to finalize the rule, ten states (West Virginia, Georgia, Alabama, Alaska, Indiana, New Hampshire, Oklahoma, South Carolina, Virginia, and Wyoming) filed a petition for review in the Eleventh Circuit challenging the final rule....