ESG is becoming an essential metric for business leaders, investors, regulators, and other key constituencies.

Increasingly, shareholders and other stakeholders evaluate a company’s performance on certain non-financial metrics, including sustainability, workforce composition and labor standards, board and management diversity, pay equity, and political/non-profit giving.

These environmental, social, and governance (ESG) metrics are a growing area of focus for companies of all sizes, investors and investment firms, lenders, governmental agencies and legislatures, stock exchanges and other self-regulatory bodies, activist shareholders, and other advocacy groups.

Our ESG Working Group applies the experience of lawyers from across the firm to address the unique ESG issues and goals of our clients. This cross-disciplinary approach allows us to help our clients navigate a fast-changing ESG landscape, including:

  • Enhanced disclosure requirements by regulators, proxy advisors, and trading platforms on certain ESG metrics;
  • Increased litigation and reputational risk to business operations caused by corporate statements, spending, and policy;
  • Divestment and investment trends in projects and entities based on their environmental and social impact;
  • The evolution of fiduciary duties of directors, investment advisors, and lenders arising from ESG initiatives; and
  • Creating and assessing diversity, equity, and inclusion goals in the workplace.
Full Text

Companies are increasingly applying ESG factors to identify material risks and growth opportunities for their businesses. Companies also face growing internal and external pressure to be more transparent about their ESG initiatives, including in the areas of board composition and diversity, compensation governance and pay equity, response to COVID-19 and worker safety, stewardship of the environment and environmental impact, community relations, and charitable or political donations.

Increasingly, companies, their boards and management, are being asked to take public positions on a variety of ESG issues of importance to investors, shareholders, employees, customers, and the public at large. For public companies, some of this transparency is being mandated by SEC rules, by stock exchange listing standards, and by ISS, Glass Lewis, and other proxy advisory firms. Our lawyers assist companies and their directors and officers with the scope of their disclosure and fiduciary duties related to ESG, help them monitor and understand the changing landscape of ESG-related risks and best practices, and defend them in litigation, if necessary.

In the investment world, ESG analysis has become an increasingly important part of the investment process and we are seeing the beginning of mainstreaming of ESG investing. We also are seeing a rise in ESG focused private equity, hedge, real estate and other pooled investment vehicles.

Our investment management practice encompasses organizing, registering, and structuring money-management firms and public and private investment companies. We also represent investors—including pension funds, family offices, and other private and institutional investors. We help these clients achieve their ESG goals by developing sound ESG investment policies and practices and vetting their investments from a legal perspective.

A company’s energy use, waste disposal procedures, water stress levels, carbon footprint, treatment of animals, and impact on climate change will be closely scrutinized by employees, consumers, and investors. Our ESG audits consider any environmental risks a client might face and how to best manage those risks.

We help clients assess their ESG standing, evaluate the environmental factors at play during transactions, and take steps to reduce their impact on the planet in pursuit of their ESG goals. We also provide wide-ranging legal counsel in the power, utilities, and renewable energy industry for whom ESG initiatives are a business imperative.

Our lawyers advise clients with the varied ESG considerations in finance and development, including matters associated with the “greening” of infrastructure and other capital assets, asset monetization, supply chain, procurement, and adaptation strategies to mitigate current and future impacts of climate change. We regularly advise clients on methods to achieve their ESG objectives, whether as lender or borrower. We advise direct lenders, fixed-income purchasers, investors, fund sponsors and managers, issuers, borrowers and developers in connection with ESG-focused debt and equity transactions and programmatic lending and investment programs.

Our nationally recognized public finance lawyers represent these clients in a wide range of ESG-driven financings across the nation. We finance green infrastructure to economically safeguard our rivers and other water resources; the installation of energy efficient capital improvements to aging multifamily housing stock and commercial, nonprofit and governmental facilities; social impact investments; and modernization of our electric grid, street light, and transportation networks. We are national leaders in the financing of bioenergy and recycling facilities – including the scaling of nascent technology to commercial scale – to reduce our nation’s dependence of coal, oil and landfills. We assist our nonprofit clients to achieve their carbon-neutrality and sustainability goals through investment in renewable energy sources and campus energy efficiencies. Our finance lawyers regularly advise clients on securities disclosure issues in municipal securities offerings and secondary market filings concerning climate change adaptation, green bond qualification and reporting on the efficacy of their ESG investments. As thought leaders acting in concert with environmental advocates, we have co-hosted our annual Green Infrastructure conferences for clients and other interested parties.

In addition to ESG compliance counseling, we advise employers on the development, enhancement, implementation, and achievement of their ESG goals, including diversity and inclusion programs. We perform diversity audits and analysis, prepare action plans, conduct employee and executive training, and advise on supplier and vendor ESG-related issues.

Salary, bonus, and severance packages given to top management have become points of scrutiny by shareholders, investors, proxy advisory firms, and the public, as well as other employees. We regularly advise clients and their boards on executive hiring, termination, and compensation structures, with specific attention to compensation governance, internal equity concerns, and the client’s ESG goals. We also advise on the preparation of human capital, executive compensation, and other related public disclosures.

How companies handle personal information continues to make headlines. In the European Union and increasingly in the United States, data privacy issues are human rights issues, which fall under the “S” of ESG. Additionally, among ESG-minded investors and ESG ratings agencies, privacy and data security is gaining a rising profile due to its potential impact on customers, users, and society at large.

Socially responsible companies have a plan for the collection and use of sensitive data. We offer cybersecurity counseling, asset inventories, and risk assessments. Our work includes drafting disclosures on information risks and developing risk management practices and incident response plans that ensure that information is being properly managed.

We help investors and lenders ensure that their assets—and their participation in transactions—fall within the boundaries of their own ESG standards, as well as the achievement of their borrower’s financed ESG objectives. We counsel clients on ESG considerations during financings, mergers, acquisitions, divestitures, and vendor selection. We advise on regulatory compliance, including securities disclosure issues, and evaluate potential ESG risks. ESG investors and conscious consumers want assurances that the financial institutions with whom they do business are ethical. Our Anti-Money Laundering team advises on customer identification, suspicious activity report requirements, and due diligence for lending and acquisitions.

In addition, many institutional and non-traditional investors have aggressive investment strategies to achieve their own ESG goals, particularly in fixed-income investments. We have a robust finance practice in the bioenergy project finance and green infrastructure finance sectors and significant experience with the issuance and disclosure of green bonds.

Our development and transactions attorneys—many of whom are LEED certified—advise on how to build ESG values into real estate projects, including the acquisition of environmental permits and siting approval and evaluating the viability of projects through environmental due diligence. On the financing side, we counsel clients on the ESG considerations in investments of real property, REITs, distressed assets, and real estate portfolios. We represent clients in litigation to challenge unacceptable permit terms and defend third-party challenges to project approvals.
Education, health care, and cultural non-profits have some of the most well-formed and aggressive ESG goals in the marketplace. Many of our nonprofit institutional clients have pressing capital needs to achieve those goals within the next 10 to 15 years. We have worked with nonprofits to finance energy efficient capital improvements and sustainability programs.
Our Government Relations and Public Policy team is active in the ESG field, monitoring developments and issues as they arise and advising clients of potential new matters on the horizon. As a result, we are able to proactively address many issues and develop ESG positions well before they come to the attention of the constituencies impacted by ESG decisions. We also advise private clients on new legislation and local building codes that aim to incentivize energy efficiency capital investment in the public and private sectors.