SPECIAL FEATURE: The Coming Impact of ESG
Recent months have seen institutional investors and other stakeholders, notably BlackRock and State Street, stressing the importance of comparable and decision-useful ESG disclosures by their portfolio companies. Such calls follow in the wake of growing interest among investors and other stakeholders in understanding and assessing the performance of companies based on ESG metrics. While the exact system by which companies will report on ESG issues remains to be determined by the market, it is clear that beginning in 2020, and in the years to follow, companies will be disclosing significant amounts of quantifiable information on a basis that will permit comparisons within and across industries. This information will be used by companies, investors, asset managers and other stakeholders in real-world business decisions and contexts of all sorts, including relating to M&A, litigation, compensation, public disclosure, competition and antitrust, capital structure and credit markets, and taxation.
The series of memos linked below, recently published by Wachtell, Lipton, Rosen & Katz, touches on many of these critical implications of the growing ESG movement for companies, their boards of directors and management, and all stakeholders. The memos also examine the growing global push, particularly by major asset managers, and more recently, the World Economic Forum, for standardized ESG reporting metrics and highlight considerations for companies looking to disclose ESG performance.
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*Originally distributed on January 15, 2020. A common concern among companies, investors, asset managers and other stakeholders considering voluntary ESG-related disclosures is the lack of a uniform standard that would permit reliable and consistent comparability. In yesterday’s annual letter to CEOs, BlackRock’s Chairman and Chief Executive Officer Larry Fink advocated for standardized and accelerated sustainability … Continued
*Originally distributed on January 29, 2020. In a letter to directors of public companies, State Street Global Advisors’ President and CEO, Cyrus Taraporevala, reiterated SSgA’s focus on “financially material” ESG issues as “a matter of value, not values.” He also confirmed that SSgA will go beyond engagement and deploy its voting power in director elections … Continued
Accelerating ESG Disclosure— WEF Task Force Releases Preliminary Framework Centered on Mainstream Reporting Aligned with UN Sustainable Development Goals Reflecting the growing push among investors, asset managers, companies and other stakeholders for a standardized ESG disclosure framework, a task force sponsored by the International Business Council (IBC) of the World Economic Forum (WEF), has released … Continued
