At King & Spalding, we are advising our clients on ESG issues every day. We are tackling our clients’ most pressing ESG matters and doing so while collaborating across industries and practice areas. Our attorneys in Corporate, Finance and Investments, Government Matters and Trial and Global Disputes are actively involved and ready to help our clients in this fast-moving area. Below are a few of the ESG issues, topics and developments that we have been tracking as November begins.
- KPMG Survey Shows Most CEOs to Put ESG on Pause: KPMG’s recent survey of CEOs provides interesting insight into companies’ views on their own ESG efforts. While the overall business case for ESG reportedly remains positive, many companies are adjusting their ESG efforts as they prepare for a recession. Over half the CEOs said that they “plan to pause or reconsider their organization’s ESG efforts in the next six months as they adjust their strategy to prepare for a recession.” The article provides additional insight on challenges companies face in implementing ESG strategies, including frustration with the lack of standards, inconsistent metrics employed by ESG rating agencies, and the lack of standardized approaches to identifying and collecting relevant data.
- FCA proposes rules to stamp out greenwashing: Similar to the U.S. Securities and Exchange Commission’s (SEC) increasing scrutiny of ESG investing approaches, the UK’s Financial Conduct Authority (FCA) is planning to introduce a variety of measures to crack down on greenwashing. According to the FCA, “[t]here are growing concerns that firms may be making exaggerated, misleading or unsubstantiated sustainability-related claims about their products; claims that don’t stand up to closer scrutiny (so-called ‘greenwashing’).” The FCA further states that “[a]lready today, greenwashing may be eroding trust in the market for sustainable investment products. Trust and integrity in these products are important to the transition to a more sustainable future.” The new rules will address a number of practices, including additional disclosure requirements and restricting how investment managers can use terms such as “green”, “sustainable,” and “ESG” for products.
- Australia’s corporate regulator issues first fine for greenwashing: Other regulators also have been increasing their scrutiny of greenwashing. The Australian Securities and Investments Commission (ASIC), Australia’s corporate regulator, recently fined Tlou Energy for misleading statements about its green credentials. Tlou Energy was fined $53,280 for “four statements and images” concerning electricity the company produced and “ASIC was concerned that Tlou either did not have a reasonable basis to make the representations, or that the representations were factually incorrect.”
- The rise of “Greenhushing”: Greenhushing, which refers to companies under-communicating their sustainability activities, is increasingly being discussed and analyzed. Companies must navigate between saying too much (greenwashing) and saying too little (greenhushing). Many companies are saying less. According to a recent report by the sustainability consultancy South Pole of over 1,200 global executives, nearly a quarter of those surveyed say they do not plan to publicize their science-based net-zero emissions reduction targets "beyond the bare minimum or as required." The linked article examines some of the reasons behind greenhushing and offers some suggested approaches as companies navigate the increasingly challenging environment and the tension between greenwashing and greenhushing. Another recent article further analyzes greenhushing, the South Pole report, and asks the question: will crackdowns on greenwashing bring more greenhushing?
- Carbon Direct just hired its first head of climate justice. Here’s why that matters: Carbon Direct, a carbon management firm, recently hired former NASA climate scientist Christian Braneon, PhD as its first head of climate justice. Like other entities assessing their operations relative to equity and environmental justice, Carbon Direct’s hiring of Dr. Braneon underscores its views on the importance of community engagement and mitigating potential unintended harms that carbon removal projects might cause. Dr. Braneon’s interview provides further insights on environmental and climate justice and greenwashing.
In Case You Missed It
In case you missed them, linked below are some recent Client Alerts from King & Spalding on particular ESG-related legal developments along with other links of interest.