Environmental, Social & Governance Briefs

In this heightened environment of activism, quantitative investing and shorting, understanding who owns your company and why and even more importantly which firms do not own the stock is information that company management and the board should have in their arsenal.

There are massive institutions, entities, and laws designed to foster trust in the markets. One of those entities is the public company auditing profession itself.

The Conference Board recently released its annual study on the state of corporate sustainability disclosure around the world. The research assesses environmental and social disclosure practices of the 250 largest publicly traded companies domiciled in each of the 10 largest economies (by GDP at purchasing power parity) in North America, Europe and Asia-Pacific. As we look to Asia, what are key trends in reporting practices across the region? Where do we see the biggest challenges ahead?

The SEC’s Division of Corporation Finance, which handles no-action letters regarding shareholder proposals, is back in business for now as the federal government shutdown ended Jan. 25.

A consensus of law firms believe the partial federal government shutdown could significantly slow down the Rule 14a-8 no-action letter process if it isn’t resolved soon.

Fortune 500 board representation of women and minorities saw an all-time high of 34 percent, compared to 30.8 percent in 2016, according to the "Missing Pieces Report: The 2018 Board Diversity Census of Women and Minorities on Fortune 500 Boards," a multiyear study published by the Alliance for Board Diversity (ABD), in collaboration with Deloitte.

Research on corporate sustainability reporting finds that large U.S. companies, even in the absence of domestic nonfinancial reporting requirements, are more transparent than their peers in much of the world. Sustainability disclosure by U.S. companies is largely driven by pressure from stakeholders.

Key trends related to the corporate disclosure of environmental and social practices in Europe

Seventy-four percent of employees who do not serve on nonprofit boards are interested in doing so. This is a great opportunity for talent development of millennials and employees from diverse backgrounds, two groups underrepresented on boards. Companies can make board work happen for their employees by helping them find suitable matches in the nonprofit sector, by training them in the legal and oversight responsibilities they will need, and by supporting and recognizing them for their work.

In advising non-director officers about conduct that could give rise to fiduciary claims, it is prudent to routinely advise that they take steps to meet the conditions of the business judgment rule. However, practitioners should also keep in mind that there may be a question whether officers will be entitled to that protection.