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Mar 18 2024
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: ESG Proxy Trends and 2024 Outlook
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Investors Concerned About Oil Sector Climate Transition Plans
ESG Investor wrote about their Stewardship Summit 2024 earlier this month. One of the topics discussed was how investors are engaging with oil and gas companies, and the information they use to do so. In general, the article explains that...
What Counts in ESG Scores?
ESG ratings and scores are fraught with credibility issues. This stems in part from the opaque nature of ratings methodologies. Most ESG ratings are proprietary black boxes, meaning that the public, researchers, and regulators, don’t know exactly how scores are...
Archive of PracticalESG Event Day 1 Now Available
Last week’s Day 1 of our three-day Practical ESG event series was a success. The three hour virtual event covered The recording is now available for members to play back at their convenience. Click here to access the archive. If...
TNFD and GRI Collaborate on Nature Risks
Nature-related disclosures are garnering a lot of attention lately. We’ve discussed the Taskforce on Nature-related Financial Disclosures (TNFD) and their nature-based disclosure standard, as well as opinions by some who believe that legal duties may exist to disclose nature risks....
CEOs Expect “Significant Returns” from ESG… Finally
A new survey from KPMG reflects a surprising change in CEO views on sustainability/ESG initiatives: expectations for a return on program expense. “… 55% of CEOs reported that they expect to see ‘significant returns’ from their sustainability investments in 3-5...
Chamber of Commerce Seeks to Intervene on the Side of the SEC
Litigation surrounding the SEC’s Climate-Related Disclosure Rules has been a rollercoaster so far and shows no signs of slowing down. The lawsuit can currently be divided into two main positions: Recently, the Chamber of Commerce moved to intervene in The...
Is it OK to be Silent on Climate in SEC Disclosures?
Yesterday, Bloomberg’s Matt Levine wrote about whether it is fraudulent under US securities law to not mention a potentially material risk in SEC filings. The article is a good read and I recommend reading it to get the full picture....
EU Narrowly Passes New Building Standards
The EU passed another highly contested climate law. The Energy Performance of Buildings Directive was recently passed by a narrow majority after facing substantial opposition. The directive establishes new building standards requiring both the renovation of energy inefficient buildings and...
Is a New Class of Sustainable Businesses Forming?
Working on scope 3 emissions and supply chain due diligence often leaves companies trying to reckon with decisions and conditions outside of their control. Continuing with my series of takeaways from last month’s Reuters Responsible Business 2024, let’s look at...
Human Rights Resolution Makes Waves at Citigroup
Proxy season is upon us and presents an opportunity to see how the investment community thinks and feels about ESG. In the past three years, there has been a push to advance shareholder proposals on human rights standards for indigenous...
Are AI and Assurance Incompatible in ESG?
This past Tuesday was Day 1 of the PracticalESG Virtual Event Series and perhaps the highlight of the day was a lively panel on AI – what it is and how it might be applied in ESG. Panelist Tyson McDowell...
Pros & Cons of New OMB Standards for Race and Ethnicity Data
The US Office of Management and Budget (OMB) announced revisions to its standards for collecting data on race and ethnicity in an effort to better reflect and capture diversity of the United States. One highlight includes a new category for...
SBTi Claws Back Hours-Old Statement on Scope 3 Offsets
Just when it seems the climate/carbon offset world can’t get twisted any further… On Tuesday, the SBTi Board of Trustees issued a statement “on use of environmental attribute certificates, including but not limited to voluntary carbon markets, for abatement purposes...
SBTi Claws Back Statement on Scope 3 Offsets (Part 2)
Continuing the story (drama) about SBTi – an article on Yahoo!Finance discusses another letter from staff to the SBTi’s board of trustees and CEO that goes even further: “‘As staff representing SBTi on a daily basis, we demand immediate action to...
Morningstar Analysis Shows No Collusion in CA 100+
Previously, we’ve written about anti-ESG’s attempts to threaten Climate Action 100+ with regulatory enforcement, alleging that climate pacts violate U.S. antitrust law. However, recent analysis from Morningstar pokes more holes in the already dubious antitrust theory. If CA 100+ were...
Texas Universities Forced to Eliminate DEI Programs
In the latest attack on DEI, the University of Texas shut down its Diversity and Inclusion programs and laid off more than 60 employees. Lawmakers warned Texas higher education leaders that failure to comply with Texas anti-DEI bill, SB17 could mean...
Bitcoin Miner Sued for Environmental Impact
I’ve written a fair amount about the environmental impact of AI, but the Business & Human Rights Resource Centre reports that bitcoin mining company Stronghold Digital Mining Inc has now been sued for air and water pollution allegedly stemming from the...
European Court Rules Against Swiss Government’s Climate Plan
Climate litigation, particularly cases brought against governments and carbon majors, is becoming a popular avenue for activists looking to press change. One such NGO won a major victory recently when the European Human Rights Court ruled in favor of the...
The $1.1B Loss Norfolk Southern’s ESG Materiality Assessment Missed
Remember last year’s derailment in Ohio of a Norfolk Southern train carrying vinyl chloride? Tuesday morning, the company announced “a $600 million agreement in principle to resolve a consolidated class action lawsuit relating to the East Palestine derailment. If approved by the court, the...
Shell Appeal Begins in Dutch Court
Those following climate litigation are familiar with the landmark 2021 Dutch ruling against Shell. However, if you don’t remember or don’t spend time knee-deep in foreign judgments against carbon majors, here is a recap: In 2019 an NGO (Friends of...
Forced Labor Remains Profitable Despite Advances in Laws
The International Labour Organization (ILO) released a report last month on the status of forced and slave labor in global supply chains based on 2021 data. This is an update of the original report from 2014. Their findings are eye-opening...
Federal Appeals Court Affirms Reverse Discrimination Case
The Fourth Circuit upheld a verdict in a case brought by David Duvall, a former white male employee of Novant Health who claimed that he lost his job as a result of reverse discrimination. He was awarded $4 million in...
Can AI Grow Without Increasing Scope 2 Emissions?
I’ve already pointed out potential conflicts between a company’s use of AI and their emissions targets/goals. Last week, Financial Times tackled the issue, saying that the “surge in demand for electricity to feed data centres and to power an artificial...
Tomorrow is Day 1 of Our No-Cost Virtual ESG Event Series
The first session of PracticalESG.com’s series of three separate no-cost virtual events is scheduled for tomorrow from 11:00am – 2:00pm Central Time – Developments in Human Rights Due Diligence, AI in ESG and Carbon Markets. We have three panels providing...
More Tips for Dealing With Conflicting ESG/Climate Information
I posed a question to our Advisory Board, who represent a range of perspectives and experiences in ESG: how do you determine what ESG information or data is “correct,” best to use/rely on and – how do you prepare to...
What Role Do ESG Standard Setters Play in a Regulated Future?
Climate-related disclosures have entered a new era. With regulations coming from the EU, California, the SEC, and other governments, the world is shifting from voluntary climate disclosure to mandatory. After years of adhering to standards and frameworks like the TCFD,...
SEC Order Stays Climate Disclosure Rules Pending Completion of Judicial Review
We’ve written previously about the litigation surrounding the SEC’s Climate Disclosure Rules. With the stay issued by the Fifth Circuit Court of Appeals lifted upon transfer to the Eighth Circuit, the question has been whether or not the Eighth Circuit...
New Enforcement Statistics for US Uyghur Forced Labor Prevention Act
US Customs and Border Protection (CBP) released its enforcement update on the US Uyghur Forced Labor Prevention Act (UFLPA). Here are some highlights related to shipments subjected to UFLPA reviews or enforcement actions: It is evident that CBP is actively...
EU Nature Restoration Law Lacking Member State Support
Stop me if you’ve heard this one: A sweeping ESG law is developed by the EU. Right before a vote that is typically considered a mere formality, member-state support falls apart and the legislation is pulled from the docket. No,...
What GCs and Legal Don’t Know About Sustainability
Lawrence recently published a blog about the importance of leaving materiality determinations up to the legal department and disclosure committees. But flipping that coin – what can legal learn from sustainability and prevent them from being seen as The Department...
Vanguard Australia Found Guilty of Greenwashing
We previously blogged about the Australian Securities & Investments Commission (ASIC) brining a case against Vanguard Australia alleging greenwashing in Vanguard’s investment products. Recently a court has ruled in ASIC’s favor finding the asset manager guilty of greenwashing. ESG Today...
PracticalESG’s Free Virtual Event Series Starts Next Week
PracticalESG.com is holding a series of three separate no-cost virtual events on a range of ESG topics. Our first session is scheduled for next Tuesday, April 9, from 11:00am – 2:00pm Central Time – Developments in Human Rights Due Diligence,...
Navigating Board Diversity: Insights from Nasdaq’s Legal Challenge
A federal appeals court in New Orleans will reconsider a challenge by conservative groups to a Nasdaq rule mandating that companies disclose board diversity. The 5th U.S. Circuit Court of Appeals, which is known for its conservative leanings, voted to...
Innovating for Sustainability: The Soggy Straw Problem
Lawrence and I just got back from Reuters Responsible Business USA 2024 in New York and it was exciting to meet some of you in person and make new connections. The event was full of thought provoking sessions with a...
More Tips for Dealing With Conflicting ESG/Climate Information
Recently, I posed a question to our Advisory Board, who represent a range of perspectives and experiences in ESG: how do you determine what ESG information or data is “correct,” best to use/rely on and – how do you prepare...
EU Report on Climate Disaster: More Than Compliance Is Needed
For years we’ve heard about potential impacts of climate change within our lifetimes. 2023 showed us that impacts are not strictly theoretical as we collectively experienced extreme weather events that interrupted our daily lives. Joining the chorus of reports, papers,...
Beyond Laws & Regs: Other Sources of Legal ESG Risk
National laws and regulations have been the focus of ESG as a compliance mandate, especially given the spate of new legislation in the EU and US. Some of those are in limbo due to policy negotiations or lawsuits – leaving...
The Three Most Common Complaints About ESG/Sustainability
Since the beginning of 2024, I’ve attended three separate sustainability conferences. The attendees and covered topics were different, but there are several commonalities. One of these is what I will call “common complaints” about ESG/sustainability. The complaints – perhaps I...
Do Directors Owe Nature-related Risks Duties Under UK Law?
Just as disclosure and management of climate-related risks is starting to become codified in many jurisdictions across the globe, attention is turning to nature-related risks. Nature-related risks can stem from climate risks but also encompass how ecosystems and environmental health...
Physical Risks Take Toll on Scopes 2 and 3
Physical risks are called out by the SEC climate disclosure rule for Scope 1, but March gave us an example of how unanticipated physical risks can manifest beyond Scope 1. A little over a week ago, I questioned how companies...
Banks Increasingly Condition Finance on Transition Plans
Some of the world’s largest banks – including Lloyds, Barclays, and ING – are developing methodologies to analyze and score company climate transition plans. According to a recent article from Responsible Investor, banks are increasingly factoring company transition plans into...
SEC Climate Disclosure Rules: Published in Federal Register!
The SEC’s Climate Disclosure Rules have officially been published in the Federal Register, starting the 60-day timer leading to the rules’ implementation. TheCorporateCounsel.net editor Liz Dunshee writes about the how the publication impacts the procedural landscape surrounding the rule: Yesterday,...
Energy Investors Question Value of Impact
Interesting perspectives on impact were brought out at last week’s Infrastructure Investor Network Global Summit in Berlin. According to a write up on the meeting from New Private Markets, there is plenty of disagreement on the nature of impact – and...
Audio Problems During Wednesday’s Webcast
We understand that there were some issues with livestreaming Wednesday’s joint webcast with TheCorporateCounsel.net. Editor John Jenkins blogged an apology today and provided members with information about how to view the archived webcast. We’re syndicating John’s blog here for any...
Simplifying the ESG Business Case (Part 3): Risks
[Ed. note: You can read Part 1 of this series here, along with Part 2]. The words “opportunities and risks” are almost overused in ESG, but most talk seems to focus on risk. Let’s drill down into what “risk” really means,...
Research Links Board Diversity to Decreased M&A Leaks
New research from Dr. Valeriya Vitkova from Bayes Business School reveals that companies with greater gender diversity in top leadership positions experience fewer leaks of confidential information about merger and acquisition plans. Compared to boards “with male-dominated leadership,” deal leak...
New York Pension Pushes Back on Nonfinancial Incentives
According to New Private Markets, some investors are less than enthusiastic about at least one innovation in sustainable investments: “New York State Common Retirement Fund, one of the largest and most influential investors in sustainable private markets, is not a...
Financed Emissions May Create Incentives for More Emissions …
There isn’t yet consensus on the idea of financed emissions, but minds are already churning on how to make money from them. Matt Levine at Bloomberg wrote about one alternative investment expert developing “a new type of securitization he says...
… and $3 Trillion in Corporate Debt May be the Catalyst
Right as I wrapped up the blog on financed emissions, this article from Bloomberg popped up that offers some potentially major support for the idea of trading financed emissions: “The credit market’s appetite for high-carbon companies will soon be put...
Webcast Today – The SEC’s Climate Disclosure Rules: Preparing for the New Regime
Join us today at 2 p.m. Eastern for a joint webcast with TheCorporateCounsel.net webcast on “The SEC’s Climate Disclosure Rules: Preparing for the New Regime” – to hear Orrick’s J.T. Ho, Goodwin’s and TheCorporateCounsel.net’s Dave Lynn, Chevron’s Rose Pierson, and...
Simplifying the ESG Business Case (Part 2)
[Ed. note: This is the second in a series of blogs on simplifying ESG/sustainability business value. Part 1 is here] The rise in investor interest in ESG has been a double edged sword. It lifted the profile of ESG/sustainability to...
What CSOs and Climate Professionals Don’t Know About Materiality
Under SEC’s new climate rule, material climate-related risks must be disclosed. In the disclosure, “a registrant should describe whether such risks are reasonably likely to manifest in the short-term (i.e., the next 12 months) and separately in the long-term (i.e.,...
Texas Pulls $8.5 Billion Fund From BlackRock
Texas has had a difficult relationship with many asset managers as of late. Starting about two years ago, the state began targeting asset managers that participate in climate pacts and those that consider ESG factors in their investments for divestment...
Climate Disclosure Rules Stay Lifted (For Now)
Wow – things are moving fast with the SEC’s Climate-related Disclosure Rules. Despite being less than a month old and not even effective, they are being litigated by a variety of Plaintiffs. That litigation has already jumped through several procedural...
Why It’s a Bad Idea to Hold Off on Climate Disclosure Work
SEC’s final climate rule isn’t effective and is moving through a spate of lawsuits – perhaps more rapidly than many expected. Compliance isn’t imminent, so you don’t really need to make any effort yet, right? Wrong – especially for companies...
Dutch Court Rules Against KLM’s Sustainability Advertising
Airlines, particularly those in Europe, have been on thin ice with regulators lately. Seventeen European airlines were called out by an NGO for alleged greenwashing last summer, and Austrian Airlines was ordered to retract certain sustainability claims in the fall....
Litigation Lottery Lands SEC Climate Case in Eighth Circuit
Well how about that – we just wrote about how the litigation against the SEC’s Climate-related Disclosures Rule could be consolidated into one case and assigned to a circuit court by lottery. The lottery wheel has been spun and the...
New Podcast: ESG Proxy Trends and 2024 Outlook
Our newest podcast ESG Proxy Trends and 2024 Outlook is now available and can be found on our Podcasts page. I sit down with Julia Forbess of Fenwick to discuss ESG shareholder proposal trends in the 2023 proxy season and...
Do Scope 3 Emissions Capture Real World Oddities?
Here is something to ponder as we end the week. As if Scope 3 emissions couldn’t get murkier, I had the following odd personal experiences this month. In one instance, I placed an order from a supplier in Oklahoma, who...
Who Has Jurisdiction Over Climate Rule Litigation?
Previously, we wrote about the various petitions filed against the SEC’s final Climate-related Disclosures Rule, including one in the Fifth Circuit that led the appellate court to issue a stay on the rule. In my initial blog, I identified five...
WTO Blasts EU For Malaysian Palm Oil Biofuel “Discrimination”
Eco-Business recently covered a landmark case about carbon emissions, renewable fuels and deforestation, where the World Trade Organization (WTO) “… found fault with the way the European Union decided against accepting palm oil as a source of renewable energy. Although the international...
Join Us for PracticalESG’s Virtual Event Series
PracticalESG.com is holding a series of three separate virtual events on a range of ESG topics. Our first session is scheduled for Tuesday, April 9, from 11:00am – 2:00pm Central Time – Developments in Human Rights Due Diligence, AI in...
EU Reaches Agreement on Forced Labor Product Ban
The EU appears set to adopt new rules banning the import of goods created with forced labor into the Union. The European Council and Parliament announced a provisional agreement on the new legislation, which typically means that major negotiations are...
Are Non-financial ESG Auditors Under Pressure?
Yesterday I wrote about how one French pension is putting pressure on their financial auditors. Here in the US, non-financial ESG/sustainability auditors – at least those auditing in certain environmental regulatory compliance contexts may soon have to make big changes...
More on Concerns About AI’s Energy Needs
Last week, we blogged about increasing tension between AI growth and the associated energy demands. Interestingly, others are beating that drum too. This week, thousands of people in the energy industry descend on Houston for the annual CERAWeek (one of...
Texas Judge Allows Anti-ESG Suit to Continue
A pending lawsuit against American Airlines was recently allowed to continue as a judge in the Northern District of Texas denied American’s Motion to Dismiss. The case revolves around claims by an American employee alleging that the company’s 401k plan...
French Pension Ties Auditor Renewal to Sustainability Reporting Diligence
One major French investor is making an interesting attempt at ensuring financial auditors don’t give sustainability data and reporting support short shrift. Here is part of what Responsible Investor said: “France’s public pension fund ERAFP has updated its voting policy to recommend...
Even Wildfire CO2 Emissions Are Bigger in Texas
As a Texan, I generally take pride in the old saying “everything is bigger in Texas,” but here is something that makes me sad. Bloomberg reported that “Texas fires released roughly 3.4 million metric ton of carbon dioxide in January...
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Featured Q&A Members Only
Contract manufacturer emissions under the SEC’s climate disclosure rules
Could I have to report contract manufacturer emissions under the SEC’s final climate disclosure rules?
03/14/2024, Question #21308
California AB 1305 – What is a “significant” emissions reduction claim?
The new California AB 1305 – Voluntary Carbon Market Disclosures Act – requires certain website disclosures Jan 1, 2024 for businesses operating in California that make “carbon neutral,” “net zero emissions,” or “significant emissions reductions” claims. What constitutes a “significant” emissions reduction claim? Any thoughts on approach or thresholds? For companies that issue sustainability reports that include emissions reduction information, at what point do you cross the line and have required reporting?
11/10/2023, Question #19206
Private equity and the CSRD
I saw Meredith’s DealLawyers blog about private equity and the CSRD, and am looking to better understand how that could apply to non-EU entities. The checklist, which is helpful, says that the scope for the CSRD will be expanded to cover non-EU companies if they meet both of the following criteria:
a. net turnover of more than €150 million in the EU at the consolidated level; and
b. at least one subsidiary or branch generating a turnover of €40 million in the EU.
I have three questions:
1. Does this only apply to “companies” or also entities like limited partnerships, etc.
2. Is there anything stopping a company from creating more subsidiaries so that none of them meet the “turnover” prong of the test?
3. Is “turnover” a similar concept to revenue?
09/15/2023, Question #18073