There has been much talk recently about ESG. What started as a metric for investors to make ethical investment decisions has now grown to encompass how companies should, and are expected to, behave in general. ESG is now a key issue for company boards and management, and an important consideration for shareholders and investors, individual

The US Securities and Exchange Commission (SEC) rulemaking process has received much attention under Chair Gensler’s leadership not only because of the volume and substance of proposed rules, but also because of the relatively short comment periods allotted for the public to respond pursuant to the Administrative Procedure Act process. As just one example of

­In a previous blog post, we noted that the International Sustainability Standards Board (ISSB) will shortly publish its proposed general sustainability-related and climate disclosure requirements.

On 31 March 2022, the ISSB published highly anticipated drafts of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (General Requirements Exposure Draft) and IFRS S2 Climate-related Disclosures (Climate Exposure Draft) for public consultation and comments. Each of the Exposure Drafts are accompanied by a ‘Basis for Conclusions’ and ‘Illustrative Guidance’ document. A high-level summary of the proposed requirements is available here.

Continue Reading International Sustainability Standards Board Begins Public Consultation on Draft Proposed Standards on General Sustainability-Related Financial and Climate-Related Disclosures

The move towards consolidated, aligned, sustainability disclosure requirements, long identified as an essential element of sustainability efforts, took a major step forward last week.  On 24 March 2022, the International Financial Reporting Standards Foundation (“IFRS Foundation”) and the Global Reporting Initiative (“GRI”) announced a collaboration agreement, the purpose of which is to seek to align their capital market and multi-stakeholder focussed sustainability disclosure regimes (the “Agreement“).  The Agreement represents the latest development in the IFRS Foundation’s efforts to consolidate the plethora of – sometimes disparate – international sustainability reporting regimes into a consolidated, more cohesive, framework, for the benefit of companies, investors and society at large.

Continue Reading International Sustainability Standards Board and Global Sustainability Standards Board to align their sustainability disclosure standards

On March 21, 2022, the U.S. Securities and Exchange Commission (SEC) voted 3:1, with only Commissioner Hester Peirce dissenting, to propose long-awaited rules that, if adopted, would require extensive reporting by public companies of climate change-related disclosure and related attestation (the “Proposal”). Comments on the Proposal are due 30 days after

In a recent Legal Update[1], we discussed the emerging intersection between Tax and ESG and highlighted the various external stakeholders pressuring for greater visibility into the global tax positions of multinational companies (MNEs).  One increasingly vocal stakeholder group is activist shareholders.  Recently, a group of institutional investors of a Fortune 50 company initiated a shareholder proposal calling for the company to publicly disclose where and how much tax it pays around the world.  This is only the latest in what is becoming a regular request by activist shareholders.

Continue Reading Tax Meets ESG: Shareholder Activism Expanding to Tax Transparency

On 2 March 2022, 175 nations endorsed a historic resolution at the fifth session of the United Nations Environmental Assembly to develop a draft global agreement on plastic pollution by the end of 2024. Significantly, the resolution covers the full lifecycle of plastic including its production, design and disposal. Inger Andersen, Executor Director of the

In a recent Legal Update[1], we discussed the intersection between Tax and ESG and the challenges companies will face responding to external pressures for greater transparency into a company’s global tax position.  We predicted that once the SEC reporting season began this month, the press would focus on the effective tax rates of high-profile companies.  That is exactly what happened recently when a leading national news outlet reported on the tax position of a well-known multinational.  The article paints an unflattering picture of the multinational’s global tax position and makes generalized observations on structures it might have used to achieve its tax results.  In this blog post, we discuss how companies can prepare for similar reporting.

Continue Reading Tax Meets ESG: Preparing for Bad Press

On 23 February 2022, the European Commission published its much-anticipated draft corporate sustainability and due diligence directive (the Draft Directive), after a number of delays (see our Previous Blog).  The Draft Directive sets out a proposed EU standard for human rights and environmental due diligence (HREDD). This includes an obligation for companies to take appropriate measures to identify actual and potential adverse human rights and environmental impacts arising from their own operations or those of their subsidiaries and, where related to their value chains, from their “established business relationships”.  The Draft Directive also provides a mechanism for sanctions to be imposed for non-compliance with the due diligence obligations and provides for director responsibility and accountability in relation to a company’s HREDD programme.

Whilst the Draft Directive remains subject to further legislative scrutiny and approval, it provides the most detailed insight yet as to the scope and form of the prospective EU HREDD obligations, and it provides a helpful template for corporates to continue developing their due diligence policies and procedures designed to identify, assess and mitigate adverse human rights and environmental impacts – both in their operations and in their supply chains.

Continue Reading Human Rights and the Environment – EU publishes draft Corporate Sustainability Due Diligence Directive

Disclosure of information on the ESG-related risks facing financial institutions is widely recognised as a vital tool to promoting market discipline.  It enables stakeholders to assess the risks presented to financial institutions by issues such as climate change, social and governance risks, whilst also allowing stakeholders to review the sustainable finance strategies of financial institutions.  In light of this, governments are increasingly introducing different mandatory ESG-related reporting requirements for financial institutions, such as TCFD-aligned reporting requirements (for further information on TCFD-aligned reporting requirements, please see our previous blog posts here and here).

Adding to the plethora of existing ESG-related reporting requirements, on 24 January 2022, the European Banking Authority (“EBA“) published its final draft implementing technical standards on Pillar 3 disclosures on ESG risks (the “Final Draft ITS“).  The Final Draft ITS sets out mandatory templates, tables and instructions that supplement the EBA’s ‘Pillar 3 package’ prudential reporting requirements (the “Reporting Requirements“), which certain EU-based financial institutions will be required to comply with under the Capital Requirements Regulation (Regulation (EU) No. 575/2013) (the “CRR“).

Continue Reading The European Banking Authority publishes new ESG reporting requirements