We are looking forward to presenting at the Society for Corporate Governance: Southeastern Chapter Fall Conference & Annual Meeting. Kevin will speak on a panel titled, “SEC Updates: What’s Hot for Corp Fin and Enforcement?” with Dave Brown, Supervisory Archivist at United States Securities and Exchange Commission; Jason Outlaw, Senior Associate in Securities Litigation Group at Alston & Bird LLP and Mellissa Campbell Duru, Vice Chair of ESG practice at Covington & Burling LLP (moderator). Sehrish will moderate a panel titled, “Tackling Governance and Disclosure Challenges in ESG” with Stefanie Holland, Director of Government Affairs at Qualcomm.
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Climate Disclosure Risks Ahead of Pending SEC Rules
I recently provided insight for a Bloomberg Law article on how publicly traded companies can prepare to disclose their climate and environmental risks ahead of impending, new Securities and Exchange Commission (SEC) rules.
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It Happened! ESG Task Force’s First Enforcement Action
In March 2021, the Securities and Exchange Commission’s (SEC) then-acting chair, Allison Herren Lee, announced the creation of an Environmental, Social and Governance (ESG) Task Force within the SEC’s Division of Enforcement. Sanjay Wadhwa, the deputy director of the SEC’s Enforcement Division heads the ESG Task Force. The initial focus of this task force was to “identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing [SEC] rules.” Before yesterday, the ESG Task Force had not yet made a publicly announced climate-related enforcement action initiated by it.
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[WEBINAR] What’s Next in ESG? Understanding the Proposed SEC Climate Change Disclosure Rules
After months of anticipation, on March 21, the U.S. Securities and Exchange Commission (SEC) voted 3:1 to propose climate change-related disclosure rules that would implement prescriptive climate-related disclosure requirements (which would be applicable for most public companies) in a wide array of climate-related areas, including with respect to governance, outlook, risk management, GHG emissions, climate-related targets and goals and financial statement disclosures. These proposed rules, which are intended to provide investors with consistent, comparable, and reliable climate-related information, would represent a major shift in the public company disclosure landscape and will require significant advance effort by public companies to facilitate compliance.
Join Bass, Berry & Sims and leading environmental, social and governance (ESG) thought leaders for the next installment in our ESG Impact Webinar series on Tuesday, May 24, 2022. Our panelists will share their experience and perspectives on what in-house counsel should consider as it relates to these proposed climate change disclosure rules. Discussion topics will include:
- Overview of the Proposed Rules.
- Required Disclosure under Regulation S-X.
- Required Disclosure under Regulation S-K.
- Phase-In Periods.
- Practical Takeaways and Next Steps.
A Summary of Certain Proxy Advisory Firm and Institutional Investor Board Diversity Policies
Institutional investors and proxy advisory firms continue developing and refining their policies regarding board diversity. While gender diversity on public company boards has been in focus for some time now, institutional investors and proxy advisory firms are also increasingly focusing on racial and ethnic diversity as part of their evolving approach to board diversity.
This post summarizes published board diversity policies of several institutional investors and proxy advisory firms into a singular resource for ease of reference. Below the initial breakdown is a description of specific policies concerning board diversity shareholder proposals.
The SEC’s Proposed Climate Change Rules Are Out: Making Sense of 500+ Pages
After months of anticipation, on March 21, 2022, the U.S. Securities and Exchange Commission (SEC) voted 3:1 to propose climate change-related disclosure rules that would impact a company’s annual reports and registration statements. As indicated previously by the Staff, the proposed climate-related disclosure framework is modeled partially on the Task Force on Climate-related Financial Disclosure’s (TCFD) recommendations and draws upon the Greenhouse Gas (GHG) Protocol. (See our previous blog post discussing the Staff’s consideration of TCFD). The proposed rules, seemingly unprecedented in nature, are significantly more prescriptive rather than “principles-based” disclosure rooted in materiality, and intended to provide stakeholders with “consistent and comparable data.”
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SEC Proposes New Cybersecurity Disclosure Requirements
On March 9, the Securities and Exchange Commission (SEC) proposed rules and amendments to enhance and standardize public companies’ disclosures regarding cybersecurity risk management, strategy, governance, and incident reporting.
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The Not So Green-Friendly Practice of Greenwashing
As investors, advisers, corporations and other stakeholders become increasingly focused on environmental, social and governance (ESG) investments and disclosures, regulators are becoming increasingly concerned with potential “greenwashing,” which Kelly Gibson, Chair of the Securities and Exchange Commission’s (SEC) ESG Task Force, defined as “exaggerating” a “commitment to, or achievement of climate . . . related goals.”
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Consolidation and Globalization of ESG Standards Progress: CRD Dissolves to Support IFRS Foundation and ISSB
Last month at the 2021 United Nations Climate Change Conference (commonly referred to as the COP26), the International Financial Reporting Standards Foundation (IFRS Foundation) announced the formation of an International Sustainability Standards Board (ISSB).
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SEC Staff Significantly Changes Guidance on Shareholder Proposals and Rescinds Prior Guidance
On November 3, Chairman Gary Gensler announced that the Staff (Staff) of the Securities and Exchange Commission’s (SEC) Division of Corporation Finance released SLB 14L (“new guidance”) regarding shareholder proposals.
The new guidance significantly changes the Staff’s approach when determining whether a shareholder proposal may be properly excluded from a company’s proxy statement. The new guidance rescinds SLBs 14I, 14J, and 14K (Rescinded SLBs), as well as any provisions of other prior Staff guidance that could be considered as inconsistent with the new guidance. A few of these changes are highlighted below.
Significant Social Policy Exception
The new guidance significantly impacts Rule 14a-8(i)(7), commonly referred to as the “ordinary business exception.” This substantive basis for exclusion permits a company to exclude a proposal that “deals with a matter relating to the company’s ordinary business operations.” Under the new guidance, the Staff will realign its approach for determining whether a proposal relates to “ordinary business” with the standard the SEC initially set forth in 1976, which provided an exception for certain proposals that raise significant social policy issues.
According to the new guidance, the Staff believes that an “undue emphasis was placed on evaluating the significance of a policy issue to a particular company at the expense of whether the proposal focuses on a significant social policy.”