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As companies increase their environmental, social and governance (ESG) reporting and statements in response to market and shareholder demands, plaintiffs have pursued with growing success legal challenges to company claims and disclosures related to ESG performance. Similarly, inventive theories are being put forward to directly attack companies for alleged ESG-related performance and operational deficiencies. In both arenas, there has been a recent growth in efforts to hold companies accountable for supplier misconduct. The expanding growing misstatement and performance litigation…

Overview On July 20, 2020, Republican Senator Josh Hawley of Missouri introduced the Slave-Free Business Certification Act (“the Act”). If passed, the Act would require every “covered business entity” — defined as any issuer under section 2(a) of the Securities Act of 1933 that has annual, world-wide gross receipts of $500 million — to audit and report on instances of forced labor in their supply chains. Companies that deliberately violate the Act could be liable…

Financial regulatory and enforcement momentum focusing on environmental, social and governance (“ESG”) issues is building up from recent activities by US, EU and UK financial regulators. As a result, we anticipate that asset managers and financial intermediaries will increasingly seek to obtain and analyze ESG-related data and information from companies in which they directly or indirectly invest. The companies themselves, particularly publicly traded companies, will be expected to provide more ESG-related disclosure. As a result,…

Corruption and sourcing-related human rights risks are top of mind for many companies, and for good reasons. Both risk categories potentially carry substantial legal and PR risks and can be outside of a company’s direct control to the extent they are implicated by the conduct of third parties. However, corruption and responsible sourcing risks are often managed by different corporate functions. Corruption risks traditionally fall under the ambit of the legal/compliance department, whereas responsible sourcing…

Baker McKenzie partners Peter Tomczak and William “Widge” Devaney both have extensive experience in corporate anti-corruption matters, and often interface with boards on compliance related topics. As such, they’ve seen how ESG concerns have trickled up to the board, and how overlaps with anti-corruption mean ethics and compliance professionals in particular are well-suited to support new ESG requirements. They discussed these developments in an interview with Ethisphere editor Tyler Lawrence. As Peter Tomczak noted, the clear…

Although the SEC currently does not require public companies to disclose any environmental, social, and governance (“ESG”) information, including human rights issues and labor practices, historically, Congress mandated additional disclosures due to public policy considerations. On July 11, 2019, a discussion draft of the Corporate Human Rights Risk Assessment, Prevention and Mitigation Act of 2019 (“CHRRA Act”) was introduced at a hearing of the U.S. House Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets. The…