Corporate reporting (including SEC developments), climate change, energy transition, supply chain management, and the mitigation of ESG-related litigation risk are expected to be the leading ESG themes of this year.
By Paul Davies, Nicola Higgs, Sophie Lamb QC, Ryan Maierson, Colleen Smith, Michael Green, Edward Kempson, James Bee, and Anne Mainwaring
As expected, 2021 saw continued emphasis on environmental, social, and governance (ESG) issues on a global scale, by governments, regulators, NGOs, the private sector, and other important stakeholders. Indeed, 2021 has been variously described as “a watershed moment for ESG” and “the year of ESG investing”[1]. We do not expect this interest to recede, and given the societal importance that now appears to be placed on ESG issues, we expect this growth trend to continue throughout 2022.
This third instalment of Latham’s annual 10 Things to Look Out For blog post highlights the ESG-related developments and trends that we expect to remain in the headlines in 2022.
On August 6, 2021, the US Securities and Exchange Commission (SEC) voted to approve Nasdaq’s proposed changes to its listing rules (the Board Diversity Objective), which seek to encourage board diversity for companies listed on the exchange and provide stakeholders with consistent, comparable disclosures concerning a company’s board composition.
The year 2020, with all of its tumult and tragedy, has challenged the relationship between companies and supply chains. Companies have faced operational challenges in sourcing goods from suppliers impacted by the COVID-19 pandemic. Moreover, many suppliers have found themselves in financial extremis and facing difficulty meeting their ongoing cash-flow needs. To meet their needs, companies and suppliers have begun to use supply chain financing arrangements with increasing regularity. Such arrangements have, however, raised concerns with the US Securities and Exchange Commission (SEC) and prompted the Financial Accounting Standards Board (FASB) to consider the proper accounting treatment. Finally, while not a new phenomenon, the year 2020 has seen new litigation seeking to hold companies responsible for the conduct of their suppliers.