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On March 28, 2023, the U.S. Securities and Exchange Commission reached a $55.9 million settlement with Vale S.A., a NYSE-traded mining company, to resolve allegations that Vale committed securities fraud by presenting intentionally misleading information in its annual Sustainability Reports and investor presentations. The SEC’s enforcement action against Vale was brought by the agency’s Climate and ESG Task Force, which was created to “proactively identify ESG-related misconduct consistent with increased investor reliance on climate and ESG-related disclosure and investment.”  For companies seeking to highlight ESG and sustainability goals and progress, this case serves as an important reminder of the need to ensure the accuracy of these public statements, lest they too end up in the crosshairs of government regulators. Continue Reading Misleading Public Company ESG Disclosure Results in SEC Enforcement Action – and $55.9 Million Settlement

Milbank LLP Environmental partner Matt Ahrens and associates Allison Sloto (Environmental) and Pinky Mehta (Global Risk & National Security) recently co-authored an article titled “An Overview of the SEC’s Proposed Climate-Related Risk Disclosure Rules” in the New York State Bar Association’s The New York Environmental Journal – Volume 42, No. 2.
Continue Reading The SEC’s Proposed Climate-Related Risk Disclosure Rules

On Monday, March 21, 2022, the U.S. Securities and Exchange Commission (“SEC”) released its long-awaited proposed rules on climate-risk disclosures. The proposed rules would amend and build upon existing climate-change disclosure rules and guidance (collectively, the “Proposed Rules”). Under the Proposed Rules, publicly traded companies and other issuers of securities that are required to file a registration statement with the SEC (collectively referred to by the SEC as “Registrants”) would be required to make climate-related disclosures to investors in their registration statements (Forms S-1, S-3, F-1, and F-3) and periodic reports (Forms 10-K, 10-Q, and 20-F).

The Proposed Rules aim to enhance and standardize disclosures on climate-related risks that are likely to have a material impact on a company’s business and financial performance over the short-, medium-, and long-term. The release of the Proposed Rules has triggered impassioned debate, illustrating both strong support for, and fervent opposition to, the proposed climate-related disclosure framework. Thus, any final rules adopted following the comment period could vary significantly from the proposals by the SEC discussed herein.Continue Reading The SEC Proposes Enhanced Climate Disclosure Rules

The SEC has been increasingly scrutinizing companies’ voluntary climate change disclosures as it moves closer to mandating reporting on greenhouse gas emissions (“GHGs”) and climate risks. Mandatory reporting of these risks is widely expected to be a component of the SEC’s anticipated Environmental, Social and Governance (“ESG”) disclosure rules, but the SEC has also taken the position that climate change risks already fall within the realm of a number of its disclosure rules.
Continue Reading SEC Increasingly Scrutinizing Companies’ Voluntary Climate Change Disclosures

Milbank LLP Environmental partner Matt Ahrens, Global Project, Energy & Infrastructure Finance partner Allan Marks and associates Allison Sloto (Environmental) and Pinky Mehta (Global Risk & National Security) recently co-authored a chapter titled “ESG Considerations in Project, Energy and Infrastructure Finance” in the International Comparative Legal Guide: Environmental, Social & Governance Law 2022, Second Edition. Global Corporate partners Iliana Ongun and Neil Whoriskey also contributed.
Continue Reading Milbank Attorneys Co-Author Chapter on ESG Considerations in ICLG: Environmental, Social & Governance Law 2022

Just before year end, the Department of Labor finalized its new rules on ESG investing and voting for retirement and pension funds.  The rules sharply restrict the ability of the fiduciaries of retirement and pension funds to make investments based on ESG factors, or to vote shares held by such funds in favor of ESG issues.  The rules are unlikely to prove popular with the Biden administration, but regardless of how long they survive, the rules currently apply to trillions of dollars of investments, and raise interesting questions about who will ultimately control the placement of a huge amount of the public’s investment capital and the voting on ESG matters of shares held by fiduciaries. 
Continue Reading The Department of Labor, ESG and All Those Undirected Votes

On November 12, 2020, Institutional Shareholder Services (“ISS”) issued its proxy voting guidelines and policy updates for 2021.  These guidelines apply for shareholder meetings taking place on or after February 1, 2021.  The most noteworthy changes are described below.  Companies included in the S&P 500 index should also note that ISS will no longer provide drafts of its reports for company review prior to publication.
Continue Reading ISS Issues Proxy Voting Guidelines and Policy Updates for 2021