On July 9, 2021, President Biden issued an executive order, “Promoting Competition in the American Economy,” which mandates greater scrutiny placed on merger deals throughout multiple sectors. (The White House, Promoting Competition in the American Economy). The order makes clear that the current Administration’s policy is to “enforce the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly.” Id. The order establishes a White House Competition Council, led by secretaries of multiple federal agencies, to “provide a coordinated response to overconcentration, monopolization, and unfair competition in or directly affecting the American economy.” Id. The order also encourages all appropriate agencies to vigorously and fairly enforce the Clayton Antitrust Act of 1914. . .
Read MoreSeventy percent of American consumers in 2021 want their favorite companies to make a positive social and environmental impact. (Business Wire). A willingness to socially and environmentally improve society is therefore more than good ethics—it is good business. Beyond consumer sales, many companies raise capital by attracting investments based on their environmental, social, and governance efforts (“ESG”). (James Chen, Investopedia). ESG investing criteria represent the broad non-financial factors investors increasingly apply to their analysis of potential investments. (CFA Institute). Although traditionally ESG standards are not a formal part of financial reporting requirements, ESG is rapidly becoming a commonly recognized investment metric. . .
Read MoreAs the economy progresses into an era marked by concern for climate change, investors and consumers are increasingly demanding action and focusing their attention on climate change. Publicly traded companies are not currently required to disclose information explaining their exposure to climate change to investors and the public. (Rachel Layne, CBS News). However, this voluntary disclosure may become mandated by the Securities and Exchange Commission (“SEC”) in the immediate future. (Dave Michaels, Wall Street Journal). . .
Read MoreNasdaq Inc.’s - a United States financial services company that operates stock exchanges - proposed rules regarding diversity on boards of directors were approved by the Securities and Exchange Commission (“SEC”) on August 6, 2021. (SEC, SEC Release 34-92590). In order for a self-regulatory agency (an organization, such as Nasdaq, that provides standards for and regulates its own industry) to change a rule, it must file the proposed change with the SEC and seek approval. (17 CFR § 240.19b-4; Adam Hayes, Investopedia). Nasdaq filed two proposed rule changes with the SEC on December 1, 2020, which proposed changes were published in the Federal Register and underwent the standard review and comment process. (SEC, SEC Release 34-92590; SEC, Federal Register). . .
Read MoreAn emerging trend among corporate investors is the use of shareholder activism to effectuate some change to a corporation, with a focus on a company’s environmental and social justice performance. (Mary Ann Cloyd, Harvard Law School Forum on Corporate Governance). Activism methods include supporting hedge funds in their effort to win board seats, urging fellow shareholders to withhold their vote on a nominated board candidate, and supporting a formal shareholder proposal. Id. In a major win for investors seeking action by large oil and gas companies to substantially reduce their carbon footprint around the world, activist investment firm Engine No. 1 (“Engine”) succeeded in gaining three seats on the board of directors of Exxon Mobil (“Exxon”) through a shareholder vote in late May 2021. (Pippa Stevens, CNBC). By securing three seats on Exxon’s board, Engine is now able to induce significant carbon-cutting action by the company, and other multinational energy and gas firms may soon be pressured by similar activist firms to follow suit.
Read MoreAs the climate change cloud darkened over the United States, American investors called for greater climate risk transparency from corporations. In December 2020, the Securities and Exchange Commission’s (“SEC”) subcommittee of Environment, Social, and Governance (“ESG”) acquiesced to these demands, “issu[ing] a preliminary recommendation that the [SEC] require the adoption of standards by which corporate issuers disclose material ESG risks.” (Allison Herren Lee, SEC Public Statement). To establish a clear and educated ESG disclosure framework, the SEC called for public comments from investors and market players on climate change disclosure. Id. This article discusses those comments, why some companies take issue with reporting ESG risks, and which form ESG disclosures might take. . .
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