The age-old debate over the purpose of for-profit corporations has reignited, with two rival theories on offer: shareholder primacy and stakeholder parity. The first posits that the primary purpose of corporations is to maximize shareholder value, while the second urges the equal interests of all other constituents, especially employees, customers, and communities.
While the debate
On November 22, 2022, the U.S. Department of Labor (the “DOL”) published a regulation entitled “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights” (the “Final Rule”). The Final Rule follows proposed rules regarding ESG investing and proxy voting by plan fiduciaries, issued on October 14, 2021 (the “Proposed Rule”) and amends prior regulations on the same topic issued by the DOL under President Trump in 2020 (the “2020 Rule”).
In the Final Rule, the DOL repeatedly emphasized that the regulation was primarily aimed at removing and remedying the chilling effect on ESG investing by plan fiduciaries created by the 2020 Rule. While the Final Rule takes a more permissive stance on the consideration of climate change and other ESG factors in investment decisions by plan fiduciaries than the 2020 Rule, the DOL cautioned that a plan fiduciary should not subordinate the interests of plan participants and beneficiaries to any collateral benefits (i.e., ESG objectives).
The Final Rule largely tracks the Proposed Rule, with a few notable exceptions summarized below.
Continue Reading DOL Finalizes Rule Regarding ESG Investing and Proxy Voting by Plan Fiduciaries
The UN’s Intergovernmental Panel on Climate Change’s Sixth Assessment Report (“IPCC Report“), published on 9 August 2021, delivered the starkest warning to date that human activity is responsible for significant changes in the Earth’s climate. The attention of the world’s scientific, political, and business communities, and of society at large, is increasingly focused
As the focus of lawmakers, regulators, shareholders and society at large increasingly turns to ESG issues, and the extent of legislation, regulation and expectation in this area grows, directors and officers must be mindful of how their duties are evolving, and of the greater scrutiny (through a perhaps unfamiliar lens) that will be applied to
On January 14, 2021, the Financial Services Commission (FSC) announced a series of measures to improve corporate disclosure rules in South Korea, including initiatives to promote ESG and responsible investing (the “Measures“). The Measures include the implementation of mandatory ESG disclosures for listed companies and potential changes to the Korean Stewardship