January 24, 2024 • 34 mins
Corporate deliberations on ESG often revolve not only around shareholders, but also the relationships with employees, customers, governments, the local community and even the planet. But sometimes tensions can arise between these various groups, and one stakeholder can be vital to helping corporate managers navigate these challenges: the lawyers. On this episode of ESG Currents, senior ESG Analyst Rob Du Boff is joined by Abigail Gampher Takacs of Bloomberg Law to chat with Danielle Reyes, a partner and co-chair of the ESG & Impact practice at Goodwin Procter, to discuss the legal issues facing corporations and investors. This episode was recorded on Nov. 27.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
ESG has become established as a key business theme as
companies and investors seek to navigate the climate crisis, energy transition,
social mega trends, mounting regulatory at tension, and pressure from
other stakeholders. The rapidly evolving landscape has become inundated with acronyms, buzzwords,
and lingo, and we aim to break these down with
(00:29):
industry experts. Welcome to ESG Currents, brought to you by
Bloomberg Intelligence, your guide to navigating the evolving ESG space,
one topic at a time. I'm Rob Duboff, Senior ESG
analyst and your host for today's episode. Now, when we
talk about ESG, we think about different stakeholders. Obviously you
(00:50):
have the shareholders, but we also think about the relationships
with employees, customers, governments, the local community, and even the planet.
But sometimes tensions can arise between these various groups. There's
one stakeholder that can be vital to helping corporate managers
navigate the challenges that come up. I'm talking, of course,
about the lawyers. This is not a lawyer joke. As
(01:12):
ESG has become more mainstream, both corporations and investors have
to rely on their legal folks, whether it's concerns about
greenwashing or dealing with anti ESG laws popping up. Basically,
before you do anything in ESG these days, you really
need to ask can I get sued for that? So
joining us today to discuss is Danielle Rayes. Danielle is
(01:33):
a partner and co chair of the ESG and Impact
practice at Goodwin Proctor. She provides broad regulatory compliance advice
with a focus on responsible investment, financial regulatory matters, human rights,
corporate social responsibility programs, and non financial reporting. Also joining
the podcast today, I've brought my own lawyer, Abigail Gamper.
(01:56):
Abigail is a legal analyst at Bloomberg Law. Her work
focus is on ESG and investor activism matters. Danielle, Abigail,
thanks both.
Speaker 2 (02:05):
For joining, Thank you for having me really excited.
Speaker 1 (02:08):
Thank you absolutely. As an ESG analyst, I deal with
a lot of ESG data. I know companies with established
ESG or sustainability programs collect a lot of data. I
imagine a lot of legal thought goes into deciding what
to disclose and how can you walk us through where
companies can and can't make ESG disclosures?
Speaker 3 (02:29):
Sure? Absolutely, I'd say there are two broad categories of
reporting that companies do, mandatory and voluntary. Particularly for US companies,
a lot of the reporting is voluntary. Some common names
for those reports are sustainability reports, ESG reports, or impact reports.
(02:50):
We also see some ESG type data that is required
to be included for certain types of US companies, such
as the data required to be disclosed by the NASDAQ
Ward Diversity Role, and now we have the new climate
focused California requirements as well. In certain jurisdictions outside of
the US, the mandatory ESG disclosure requirements are more extensive
(03:14):
and growing, so we see a lot of those types of.
Speaker 2 (03:16):
Disclosures as well.
Speaker 3 (03:18):
There's actually perhaps a third category, which I'll call voluntary,
but not really. You mentioned the vast array of important stakeholders,
and those stakeholders may have their own requirements, so those
those reports may be technically voluntary, but practically speaking, if
(03:41):
the consequence of not providing that information is to lose
an important investor, for example, then it's really may as
well be mandatory. So yeah, the risk of losing that
investor is just more powerful than the fact that the
requirement doesn't exist, got it.
Speaker 1 (03:58):
So I know a lot of the data is collected
and disclosed, and I know some is not disclosed externally.
So even though investors analysts like me are always asking
for it, as you mentioned, there's kind of this implied requirement.
What's the right time for disclosure and how should companies
balance the potential legal issues with the stakeholder demands.
Speaker 2 (04:21):
Yeah, that's a great question.
Speaker 3 (04:22):
Obviously, the first consideration is whether the reporting is mandatory.
Speaker 2 (04:27):
So if it is, then it's not really a decision point.
Speaker 3 (04:31):
But almost as important is what is market for the
company's peers, So both the current company's current peers and
there we'll call it aspirational peers.
Speaker 2 (04:42):
So we're talking about timing.
Speaker 3 (04:43):
So for a private company, for example, not currently subject
to mandatory disclosure requirements that is hoping to go public soon,
as part of that IPO prep, they should consider what
ESG related data they may be required to disclose once
they go public or as part of the process of
(05:05):
going public, or even the voluntary disclosures that their peers
or their aspirational peers are doing, whether.
Speaker 2 (05:14):
They should also.
Speaker 3 (05:17):
Consider making those disclosures or similar types of disclosures to
be considered part of that peer group. So it's one
of what many considerations. It shouldn't be the driving consideration,
but it is something that is.
Speaker 2 (05:28):
Important to at least consider and as far as balancing.
Speaker 3 (05:32):
The potential legal challenges with stakeholder concerns, again, the legal
requirements are not optional, but beyond that, in a nutshell,
I would say it's better not to disclose at all
than to disclose bad data or data that a company
can't stand behind just because the peers are disclosing that data,
or just because they're being asked to disclose the data.
Speaker 2 (05:54):
They think.
Speaker 3 (05:55):
If they're being asked by an important stakeholder to disclose
data that they don't currently track or that they don't
have a process for verifying, it's better to have that
conversation with that stakeholder and to discuss potential disclosure of
that information in the future as part of an ESG
(06:17):
reporting journey than to just start disclosing it because the
company will open up itself to substantial regulatory risk.
Speaker 1 (06:25):
Otherwise, Yeah, I hear that a lot that you know
financial data is audited, right, so you know some of
the numbers, even if they've been collected by professionals. You know,
some senior managers may not be familiar with this type
of data. You know, is there a kind of comfort
part of it that plays into whether you're disclosed or not.
Speaker 2 (06:45):
I think there should be.
Speaker 3 (06:47):
I don't know that there always is, but there always
should be a level of comfort that goes along with
anything that is disclosed, either publicly or privately, just like
as there needs to be a level of comfort with
financial data. I'm not saying that only data only ESG
data that has been audited should be disclosed, because we
(07:10):
don't even really know what ESC auditing ESG data auditing
is going to look like yet, But there should be
some sort of internal controls in place for the disclosure
of ESG data, just like there are internal controls in
place for financial data that's not ESG related.
Speaker 4 (07:29):
The legal rules of the road when it comes to
ESG are really far from settled, and many states are
eyeing or have already passed efforts to put rules and
regulations in place. The trouble is that states like California
and New York versus Texas and Florida will potentially create
drastically different disclosure regimes in the future. What are the
(07:51):
strategies behind where to disclose ESG information, what information to
include in those disclosures, and what audience companies should be reached.
Speaker 3 (08:00):
Yeah, that's a great point that there are different lots
of different locations where this information might pop up, and
lots of different audiences that the information may be created for.
Who in those audiences may be very different and maybe
wanting to see different things in the data. But it's
really important not to change the data depending on the audience,
(08:26):
right because again, there's regulatory risks. You mentioned uncertainty. Certainly
there is a lot of uncertainty right now, given the
multiple pending SEC rules for example, and the different approaches
that different states are taking. But there is still significant
regulatory risk under the current rules with respect to material
(08:49):
misrepresentation or greenwashing in this context. So disclosing different esg
information depending on where or to whom the information is
reported is a red flag that could draw unwanted scrutiny.
The information doesn't have to be presented in an identical way,
so I'm not saying that your sustainable report sustainability report
has to start looking like your SEC filings or anything
(09:12):
like that, but it is important for the different disclosures
to not contradict each other. They can be presented in
a way that is specific to the audience, but it
should be essentially the same information.
Speaker 4 (09:26):
And does a company opting to include information in one
place versus another place, such as its website versus a
sustainability report or an SEC filing pose unique legal challenges
for where they've opted to disclose.
Speaker 2 (09:40):
Absolutely.
Speaker 3 (09:41):
I think that goes back to the internal controls that
we talked about earlier. So you know, whether the information
is disclosed on the website versus an SEC filing could
determine the path that the information follows as it goes
(10:01):
from the source of the information.
Speaker 2 (10:03):
To the report.
Speaker 3 (10:06):
And if the information the same information goes down different
paths and the result is that the information that's being
reported is different, that's an issue. So if you, for example,
send information through your CFO team and your legal team,
if it's going to go in an SEC filing versus
only the marketing team, if it's going to go on
(10:28):
the website, that is very likely to cause issues for
you from a regulatory perspective. So again, doesn't have to
be the exact same process, but there should be the
internal controls.
Speaker 1 (10:39):
And circling back real quick about you mean, you've really
touched on the idea of auditing, so, you know, and
internal controls like you know, I guess what are companies
doing to really build up those internal controls?
Speaker 4 (10:53):
You know?
Speaker 1 (10:54):
Is it similar to the audit function that we're seeing
we've seen a lot of corporations, or is it kind
of a different skill set.
Speaker 3 (11:02):
I think there are a lot of similarities and there
are some key differences, And right now I think there's
a wide range in terms of maturity level when it
comes to actual staff.
Speaker 2 (11:16):
For reporters.
Speaker 3 (11:18):
A lot of companies are still just kind of engaging
in a dialogue with their external auditors to.
Speaker 2 (11:27):
Talk about what will be required in the future.
Speaker 3 (11:31):
Want some of the assurance requirements that are in the
pending SEC rule for example, the currents California Climate Focus laws,
what that will look like, what will the auditors need
to see? But I don't think there has been any
definitive conclusions on that topic. So again, it's still an
(11:55):
uncertain area.
Speaker 2 (11:57):
And I wouldn't say that I.
Speaker 3 (11:58):
Have seen a lot of examples of internal controls for
ESG data that are the same as the internal controls
for the financial data that's going into SEC filings for example. However,
it should be something other than there's someone in a
corner who has as a side of their desk task
(12:19):
pulling together all of the information that will go in
the sustainability report.
Speaker 2 (12:23):
Needs to be more robust than that.
Speaker 4 (12:26):
So the one size fits all model is really tricky
when it comes to ESG. There's no one company model,
and the SEC is not the only entity looking into
how companies should be disclosing ESG data. Are there any
unique challenges for companies that operate across state lines, domestically
or internationally in jurisdictions such as the EU.
Speaker 3 (12:49):
Yes and no, And I think it depends more on
the business model and the customers and other stakeholders than
it does the location of the company. With the obvious
exception that companies located in the EU are subject to,
(13:13):
for example, are subject to different requirements than companies that
are based in the US. But if they are marketing
into the EU, or they have investors that are in
the EU, then those same requirements can trickle down to them.
(13:35):
Basically because of what we talked about earlier about investors,
for example, requesting information from these US based companies. Sometimes
they're asking because they have their own bespoke reporting that
they're doing, and sometimes they're asking because they have regulatory
requirements that apply to them and they need the data
(13:58):
from their supply chain in order to comply with their
own reporting requirements. So I think the influence of those
requirements that are coming from non US jurisdictions can still
have a significant impact on US based companies. And as
(14:20):
far as operating across state lines, for example, I think
it's the same thing. So if you have a fund,
for example, a US based fund, and you would like
to attract public money from both a state that restricts
the consideration of ESG factors when it comes to investing
(14:46):
public money and another state that is requiring the disclosure
of certain ESG type data. It's not that you can't
do both of those things. It's just that you have
have to be very careful about how you're approaching the
satisfaction of both needs on both sides. So again, as
(15:10):
Rob said, your lawyer is your best friend. Here, it
can be done. It is just tricky.
Speaker 4 (15:17):
And speaking of navigating tricky waters, those that have been
following this space have been bombarded by the term greenwashing
in recent years. Companies are now more than ever trying
to balance promoting their environmental efforts with the risk of
doing so in a way that could be potentially misleading.
What are the key differences from a legal standpoint between
(15:39):
making a good faith effort to talk up a company's
sustainability efforts and green washing.
Speaker 3 (15:46):
I don't want to sound like a broken record here,
but again, this all goes back to the internal controls
that we've been talking about.
Speaker 2 (15:53):
So a good faith effort has as its.
Speaker 3 (15:56):
Foundation confidence and the accuracy of the data that's being
reported on. I don't think this is an area where
puffing for marketing purposes is a good idea at all.
Assumptions also need to be carefully explained. So if you're
reporting data based on estimates and based on assumptions, that
data should be accompanied by a very clear explanation of
(16:21):
those assumptions and those estimates. If there are no serious
controls in place, or the assumptions that are being made
or unreasonable, then the greenwashing risk is there. But as
long as you have the internal controls in place, I
think you should the companies should feel free to talk
about all the good work that they're doing in this space.
Speaker 1 (16:40):
And if I could just interject here, does materiality play
into it at all. I mean one of the things
as a financial honist, I look at financial materiality. I've
seen in some companies disclosures. I'm not going to name names,
but I've seen a bank report about a whole page
and their sustainability report about all the amount of paper
they're saving from you know, you know, using electronic communications.
(17:06):
But then there's a footnote at the bottom saying, you know,
paper consumption is not material according to I think it
might have been sasby at the time, But you know,
does that play into it at all? Or is it
just as long as the data is good, it's fine
and disclose it even if it may not be that
relevant to investors.
Speaker 2 (17:24):
Yeah, that's a really great question.
Speaker 3 (17:25):
I think materiality really comes into play where we're talking
about mandatory disclosures more so than when.
Speaker 2 (17:34):
We're talking about voluntary disclosures.
Speaker 3 (17:36):
So I see that come up a lot when a
company wants to report on in your example, paper consumption
in its sustainability report, but doesn't want the fact that
it did so to trigger a requirement to include information
about paper consumption in its SEC filings. But I do
(17:59):
think it is it's an important consideration whether the inclusion
of so much immaterial information could be greenwashing because if
you only include immaterial information in your ESG report, and
you're excluding lots of information that is material.
Speaker 2 (18:21):
Because this is all voluntary, right, even if you're following.
Speaker 3 (18:25):
A framework, there are options to exclude information if you
can explain why you're doing that. So, if you have
a fully immaterial ESG report, which I don't think this
is an extreme example.
Speaker 2 (18:42):
I don't think this happens a lot. But if it were.
Speaker 3 (18:46):
The case that your entire report is immaterial, could someone.
Speaker 2 (18:51):
Accuse you of greenwashing? I think so So I think.
Speaker 3 (18:54):
I'm not saying that you could. Only you should only
include information in your ESG report if you're willing to
also talk about it in your SEC filings. I think
that's an important consideration, and you should really understand why
you're making that decision because maybe it's not material to
you for for mandatory reporting requirements, but you have an
indication from your stakeholders that they want that information from you.
(19:17):
I think that's a reasonable basis to include information, right.
Speaker 1 (19:20):
I mean, I'm I'm definitely you know, love to pound
the table disclosure disclosure, disclosure, but I think you know
there can be a risk of information overload if they're
just you know, throwing a bunch of information that you know,
maybe out of context. You know it's truthful, and you
know some some stakeholder might care about it, but you know,
when analyzing companies, you know, major esg. Profile, maybe it's
(19:44):
not as helpful.
Speaker 2 (19:45):
Yeah. Absolutely, I think too much information can.
Speaker 3 (19:49):
Be unhelpful, and not every stakeholder is necessarily going to
get a vote when it comes to what.
Speaker 2 (19:57):
Ultimately goes into the report.
Speaker 3 (20:00):
But you know, if a major stakeholder or multiple stakeholders
want the information, again, I think it's a reasonable decision
to include it, even if technically it's not material.
Speaker 4 (20:11):
Greenwashing comes up in a ton of context and a
lot of different iterations. But what about sustainable debt lenders?
A recent Bloomberg Law or Bloomberg article revealed that more
sustainable debt lenders are seeking declassification clauses to mitigate the
legal risks of greenwashing. In your view, do greenwashing legal
(20:33):
risks differ for issuers of sustainable debt?
Speaker 3 (20:37):
No, I think the greenwashing risks are exactly the same,
they just may manifest differently. So I think the main
issue discussed in that article, is that what a reasonable person,
if I may paraphrase, what a reasonable layperson may understand
is meant by a sustainability link loan may be different
(20:57):
from what the terms of the loan actually when it
comes to the consequences of failure to meet the stated
sustainability goals.
Speaker 2 (21:06):
So again it comes down.
Speaker 3 (21:07):
To ensuring that what is being disclosed is accurate and
not just accurate to those who have access to or
who can understand the fine print. It really needs to
be manifestly easy to understand by a reasonable person and.
Speaker 2 (21:26):
Not attackable as hiding the ball.
Speaker 3 (21:35):
And I think that was kind of if I were
to summarize one of the issues discussing the article.
Speaker 4 (21:41):
Yeah, I think it's really an issue of the audience.
So many people are interested in this ESG data and information,
and there's definitely a difference in the understandability and who's
looking at it. So on the other end of things,
in the last year or two, green hushing has started
(22:01):
to pop up, a sort of swing of the pendulum
back from greenwashing. Does underrepresenting sustainability efforts actually do anything
to mitigate legal risks when it comes to environmental representations.
Speaker 3 (22:14):
It's a really great example of how ESG factors need
to be considered holistically, so you can't put winers on
just focus on the E and don't think about the S,
or just focus on governance, don't think about any social impact.
Green hushing can reduce certain types of risks, and it's
(22:35):
always a good idea to be very confident that what
is being disclosed as accurate as we've been discussing, and
to review data that has already been disclosed to make
sure it is still accurate and adjust accordingly if it isn't.
Speaker 2 (22:48):
So if you how to report from.
Speaker 3 (22:52):
Twenty twenty and looking back on it now, you would
have changed some things in that report, it's quickly reasonable
to re word the description of certain topics in your
current report. However, if you go so far as to
(23:12):
say that you're not doing things that you actually are doing,
that's just another form of misrepresentation. So it's green hushing
that is also a material miss representation and can cause
the same types of issues that other types of material
miss representations can cause. So it's just another type of
inaccuracy and it could come back to haunt a company
(23:33):
when a stakeholder who wants the company to be doing
those things comes calling. So for example, if you're pulling
back what you're saying to appease an anti ESG state,
but you also have operations or consider it a pro
ESG state to be important, you don't want to be
in a position where you're having to explain yourself to
(23:55):
the pro ESG.
Speaker 2 (23:58):
State representatives that you were just trying to appease the
anti ESG states.
Speaker 4 (24:06):
Yet another example of how this state situation is causing
a headache for us.
Speaker 2 (24:10):
Absolutely great.
Speaker 1 (24:13):
I want to switch gears a little bit talk about
private companies. I mean, we touched on this a little
bit with the whole pre IPO phase, but you know,
there's there's a whole range of private companies, whether it's
you know, fifth generation family owned, it's held by private equity,
or whether they're ultimately looking to go public soon. Just
does that change the requirements or how they think about
(24:35):
disclosing and also you know, whether it's disclosing new investors
or maybe as you talked about disclosing new a customer
as part of their legal requirements. You know, how how
should private companies think about this and how might that
differ from public companies.
Speaker 2 (24:51):
That's a great question.
Speaker 3 (24:52):
I think the first thing that comes to mind, because
I've been getting a lot of questions from private companies
about this, is the set of California bills that have
been passed recently that apply to private and public companies.
And it's a really great example of how companies can't
(25:15):
just ignore rules that are coming out that will only
apply to public companies. One, because there's this example of
a set of rules that are very similar to the
SEC proposed climate disclosure rules in many ways that will
apply to them as long as they're doing business in California.
(25:37):
We don't know exactly what that threshold will be, but
we can assume for now that it will be very
easy to trigger threshold.
Speaker 2 (25:45):
And for those companies that have been.
Speaker 3 (25:49):
Basically ignoring developments with respect to the SEC rule are
finding themselves flat footed now that the California bills have
been passed. There are also things in those rules that
apply to public companies that are just a matter of
uh good governance potentially that should be considered as well. So,
(26:12):
for example, there are requirements to disclose how climate risks
are being handled at the board level and at the
management level. Those are good things to think about regardless,
even if you're not required to disclose those things. There
are also other rules that apply to private companies, depending
(26:34):
on the industry that they're in, that are also very
similar to the rules that applier will apply to public
companies regarding the management of climate related financial risks. So,
for example, certain US banks are subject to regulatory requirements
when it comes to the management of those risks, and
insurance companies as well. So, I you know, for private companies,
(26:58):
I think a good place to start is with the
requirements that pop up in multiple places that will apply
to them, whether they are public or private. And then
a second thing to think about is also the requirements
that apply to public companies That are just.
Speaker 2 (27:17):
Good things to think about. Whether they actually adopt.
Speaker 3 (27:21):
The practices that those non applicable rules would require them too,
it may be a good idea.
Speaker 4 (27:29):
So you've mentioned both the SEC's hopefully finalized to Climate
rule and the forthcoming California rule. They both face almost
certain litigation once they're finalized. As far as litigation strategy
goes around these issues, is there a benefit to litigating
rules that the industry just doesn't like.
Speaker 3 (27:51):
Well, especially now with the major questions doctrine coming out
of this Supreme Court West Virginia b EPA case. It
is certainly reasonable for the industry to consider litigation or
supporting litigation if the rules are arbly, if the rules
(28:15):
arguably fall within the Major Questions doctrine. Because following that case,
especially certain courts are not referring to Chevron difference as
much to simply dismiss claims challenging a new rule. So
some of that litigation has been very successful in at
least staying rules, if not completely overturning them, which can
(28:37):
result in significantly more compliance time, and that benefit alone
could make it worthwhile to consider litigation.
Speaker 4 (28:48):
And do you have any sort of tips for companies
that are looking to ramp up these ramp up compliance
with these new rules if they are likely to be
struck down or at least for some time.
Speaker 3 (29:02):
Absolutely, And I think this really depends on how far
along the company is on their ESG related reporting journey,
and especially their greenhouse gas emissions journey. Greenhouse gas emissions
reporting pops up in so many different places, as we
(29:24):
have been discussing, it might pop up in a role
that applies to the company, It might pop up in
a role that it applies to a company that.
Speaker 2 (29:35):
Another company is a major supplier to, So.
Speaker 3 (29:38):
Even if the roles don't apply to the supplier effectively,
they will certainly. Outside of the US, greenhouse gas emission
reporting in alignment with TCFD is very prevalent. That's where
a lot of countries are gravitating toward when it comes.
Speaker 2 (29:58):
To mandatory disclosure.
Speaker 3 (30:00):
So there are certain areas that it makes a lot
of sense to focus on because the company is likely
to have to do that type of reporting anyway. And then,
as we talked about before, thinking about the things that
are good ideas from a government's perspective anyway always makes sense.
Speaker 4 (30:22):
We've talked a lot about climate climate related financial risks
and greenhouse gas disclosures, but the ESG disclosure landscape is
really vast. Do you anticipate the industry sort of collaborating
in litigation strategy in the future and that being sort
of a lasting threat for the ESG space.
Speaker 3 (30:44):
I think that that will be the case in the
short term, but the rest of the world is moving ahead,
and eventually if there's this bifurcation of requirements, depend on
whether a company is solely focused on its US operations
(31:06):
versus companies that operate globally, there may be less of
an inclination to collaborate within the industry if a huge
chunk of the industry is subject to those other requirements anyway,
it may not be the best use of their time
(31:28):
to try to fight US requirements that would simply mirror
the requirements of the non US jurisdictions to which those
big global companies are subject to anyway.
Speaker 1 (31:42):
Now, Danielle, you've talked about the different rules and how
they're kind of you know, even if the US is
kind of slow playing it, the rest of the world
is going to kind of drag them forward. But is
there a risk that as you have different frameworks being
built up in different parts of the world that may
apply globally, that there's going to be some contradictions or
(32:04):
how should companies think about navigating those I think.
Speaker 3 (32:07):
We're seeing that issue already come up, certainly with respect
to what I'm hearing privately. It's a huge concern with
the big global companies because it's not only the regulators
that are requiring slightly different things just like this, annoyingly
(32:29):
slightly different, almost the same but not quite. It's also
the bespoke reporting that they're being asked to do that
falls within that category of voluntary, but not really, because
investors are requiring their own data that they need for
their own purposes, and dealing with all of those things
(32:51):
at the same time.
Speaker 2 (32:53):
Requires a lot.
Speaker 3 (32:54):
Of resources, and especially given the uncertainty with some of
those including the EU requirements, which are still being worked
out to a large degree, spending all.
Speaker 2 (33:09):
Of those resources on that.
Speaker 3 (33:12):
Type of work is something that it's causing fatigue to
be frank and I think ultimately will lead to consolidation
of frameworks, which we're already starting to see, but it's
very slow going.
Speaker 2 (33:28):
But I think that's the direction.
Speaker 1 (33:29):
We're going in now. I think the extreme case is,
you know, we've heard about what happens if say Texas
or Florida passes a law that makes it illegal to
disclose what the California rules asking for it. First of all,
is that even possible? And second of all, how would
that ultimately play out.
Speaker 2 (33:47):
I've heard that question come up a few times. I don't.
It's hard for me to envision that happening because I don't.
Speaker 3 (33:58):
I'm just not aware of any other example of a
prohibition of disclosing certain data that's other than in the
privacy context, right, what would be the basis for prohibiting
a company from disclosing climate related data?
Speaker 1 (34:18):
I mean, I agree one hundred percent, but it's also
the world we're living in today unfortunately. Okay, Danielle Abigail,
thank you so much for joining. You can find more
information on topics like ESG compliance by going to BI
ESG go on the Bloomberg terminal, or read some of
Abigail's work via Bloomberg Law dot com. If you have
(34:40):
an ESG quandary or a burning question you'd like to
ask bi's expert OLiS analysts, send us an email at
ESG Currents at Bloomberg dot net
ESG has become established as a key business theme as
companies and investors seek to navigate the climate crisis, energy transition,
social mega trends, mounting regulatory at tension, and pressure from
other stakeholders. The rapidly evolving landscape has become inundated with acronyms, buzzwords,
and lingo, and we aim to break these down with
(00:29):
industry experts. Welcome to ESG Currents, brought to you by
Bloomberg Intelligence, your guide to navigating the evolving ESG space,
one topic at a time. I'm Rob Duboff, Senior ESG
analyst and your host for today's episode. Now, when we
talk about ESG, we think about different stakeholders. Obviously you
(00:50):
have the shareholders, but we also think about the relationships
with employees, customers, governments, the local community, and even the planet.
But sometimes tensions can arise between these various groups. There's
one stakeholder that can be vital to helping corporate managers
navigate the challenges that come up. I'm talking, of course,
about the lawyers. This is not a lawyer joke. As
(01:12):
ESG has become more mainstream, both corporations and investors have
to rely on their legal folks, whether it's concerns about
greenwashing or dealing with anti ESG laws popping up. Basically,
before you do anything in ESG these days, you really
need to ask can I get sued for that? So
joining us today to discuss is Danielle Rayes. Danielle is
(01:33):
a partner and co chair of the ESG and Impact
practice at Goodwin Proctor. She provides broad regulatory compliance advice
with a focus on responsible investment, financial regulatory matters, human rights,
corporate social responsibility programs, and non financial reporting. Also joining
the podcast today, I've brought my own lawyer, Abigail Gamper.
(01:56):
Abigail is a legal analyst at Bloomberg Law. Her work
focus is on ESG and investor activism matters. Danielle, Abigail,
thanks both.
Speaker 2 (02:05):
For joining, Thank you for having me really excited.
Speaker 1 (02:08):
Thank you absolutely. As an ESG analyst, I deal with
a lot of ESG data. I know companies with established
ESG or sustainability programs collect a lot of data. I
imagine a lot of legal thought goes into deciding what
to disclose and how can you walk us through where
companies can and can't make ESG disclosures?
Speaker 3 (02:29):
Sure? Absolutely, I'd say there are two broad categories of
reporting that companies do, mandatory and voluntary. Particularly for US companies,
a lot of the reporting is voluntary. Some common names
for those reports are sustainability reports, ESG reports, or impact reports.
(02:50):
We also see some ESG type data that is required
to be included for certain types of US companies, such
as the data required to be disclosed by the NASDAQ
Ward Diversity Role, and now we have the new climate
focused California requirements as well. In certain jurisdictions outside of
the US, the mandatory ESG disclosure requirements are more extensive
(03:14):
and growing, so we see a lot of those types of.
Speaker 2 (03:16):
Disclosures as well.
Speaker 3 (03:18):
There's actually perhaps a third category, which I'll call voluntary,
but not really. You mentioned the vast array of important stakeholders,
and those stakeholders may have their own requirements, so those
those reports may be technically voluntary, but practically speaking, if
(03:41):
the consequence of not providing that information is to lose
an important investor, for example, then it's really may as
well be mandatory. So yeah, the risk of losing that
investor is just more powerful than the fact that the
requirement doesn't exist, got it.
Speaker 1 (03:58):
So I know a lot of the data is collected
and disclosed, and I know some is not disclosed externally.
So even though investors analysts like me are always asking
for it, as you mentioned, there's kind of this implied requirement.
What's the right time for disclosure and how should companies
balance the potential legal issues with the stakeholder demands.
Speaker 2 (04:21):
Yeah, that's a great question.
Speaker 3 (04:22):
Obviously, the first consideration is whether the reporting is mandatory.
Speaker 2 (04:27):
So if it is, then it's not really a decision point.
Speaker 3 (04:31):
But almost as important is what is market for the
company's peers, So both the current company's current peers and
there we'll call it aspirational peers.
Speaker 2 (04:42):
So we're talking about timing.
Speaker 3 (04:43):
So for a private company, for example, not currently subject
to mandatory disclosure requirements that is hoping to go public soon,
as part of that IPO prep, they should consider what
ESG related data they may be required to disclose once
they go public or as part of the process of
(05:05):
going public, or even the voluntary disclosures that their peers
or their aspirational peers are doing, whether.
Speaker 2 (05:14):
They should also.
Speaker 3 (05:17):
Consider making those disclosures or similar types of disclosures to
be considered part of that peer group. So it's one
of what many considerations. It shouldn't be the driving consideration,
but it is something that is.
Speaker 2 (05:28):
Important to at least consider and as far as balancing.
Speaker 3 (05:32):
The potential legal challenges with stakeholder concerns, again, the legal
requirements are not optional, but beyond that, in a nutshell,
I would say it's better not to disclose at all
than to disclose bad data or data that a company
can't stand behind just because the peers are disclosing that data,
or just because they're being asked to disclose the data.
Speaker 2 (05:54):
They think.
Speaker 3 (05:55):
If they're being asked by an important stakeholder to disclose
data that they don't currently track or that they don't
have a process for verifying, it's better to have that
conversation with that stakeholder and to discuss potential disclosure of
that information in the future as part of an ESG
(06:17):
reporting journey than to just start disclosing it because the
company will open up itself to substantial regulatory risk.
Speaker 1 (06:25):
Otherwise, Yeah, I hear that a lot that you know
financial data is audited, right, so you know some of
the numbers, even if they've been collected by professionals. You know,
some senior managers may not be familiar with this type
of data. You know, is there a kind of comfort
part of it that plays into whether you're disclosed or not.
Speaker 2 (06:45):
I think there should be.
Speaker 3 (06:47):
I don't know that there always is, but there always
should be a level of comfort that goes along with
anything that is disclosed, either publicly or privately, just like
as there needs to be a level of comfort with
financial data. I'm not saying that only data only ESG
data that has been audited should be disclosed, because we
(07:10):
don't even really know what ESC auditing ESG data auditing
is going to look like yet, But there should be
some sort of internal controls in place for the disclosure
of ESG data, just like there are internal controls in
place for financial data that's not ESG related.
Speaker 4 (07:29):
The legal rules of the road when it comes to
ESG are really far from settled, and many states are
eyeing or have already passed efforts to put rules and
regulations in place. The trouble is that states like California
and New York versus Texas and Florida will potentially create
drastically different disclosure regimes in the future. What are the
(07:51):
strategies behind where to disclose ESG information, what information to
include in those disclosures, and what audience companies should be reached.
Speaker 3 (08:00):
Yeah, that's a great point that there are different lots
of different locations where this information might pop up, and
lots of different audiences that the information may be created for.
Who in those audiences may be very different and maybe
wanting to see different things in the data. But it's
really important not to change the data depending on the audience,
(08:26):
right because again, there's regulatory risks. You mentioned uncertainty. Certainly
there is a lot of uncertainty right now, given the
multiple pending SEC rules for example, and the different approaches
that different states are taking. But there is still significant
regulatory risk under the current rules with respect to material
(08:49):
misrepresentation or greenwashing in this context. So disclosing different esg
information depending on where or to whom the information is
reported is a red flag that could draw unwanted scrutiny.
The information doesn't have to be presented in an identical way,
so I'm not saying that your sustainable report sustainability report
has to start looking like your SEC filings or anything
(09:12):
like that, but it is important for the different disclosures
to not contradict each other. They can be presented in
a way that is specific to the audience, but it
should be essentially the same information.
Speaker 4 (09:26):
And does a company opting to include information in one
place versus another place, such as its website versus a
sustainability report or an SEC filing pose unique legal challenges
for where they've opted to disclose.
Speaker 2 (09:40):
Absolutely.
Speaker 3 (09:41):
I think that goes back to the internal controls that
we talked about earlier. So you know, whether the information
is disclosed on the website versus an SEC filing could
determine the path that the information follows as it goes
(10:01):
from the source of the information.
Speaker 2 (10:03):
To the report.
Speaker 3 (10:06):
And if the information the same information goes down different
paths and the result is that the information that's being
reported is different, that's an issue. So if you, for example,
send information through your CFO team and your legal team,
if it's going to go in an SEC filing versus
only the marketing team, if it's going to go on
(10:28):
the website, that is very likely to cause issues for
you from a regulatory perspective. So again, doesn't have to
be the exact same process, but there should be the
internal controls.
Speaker 1 (10:39):
And circling back real quick about you mean, you've really
touched on the idea of auditing, so, you know, and
internal controls like you know, I guess what are companies
doing to really build up those internal controls?
Speaker 4 (10:53):
You know?
Speaker 1 (10:54):
Is it similar to the audit function that we're seeing
we've seen a lot of corporations, or is it kind
of a different skill set.
Speaker 3 (11:02):
I think there are a lot of similarities and there
are some key differences, And right now I think there's
a wide range in terms of maturity level when it
comes to actual staff.
Speaker 2 (11:16):
For reporters.
Speaker 3 (11:18):
A lot of companies are still just kind of engaging
in a dialogue with their external auditors to.
Speaker 2 (11:27):
Talk about what will be required in the future.
Speaker 3 (11:31):
Want some of the assurance requirements that are in the
pending SEC rule for example, the currents California Climate Focus laws,
what that will look like, what will the auditors need
to see? But I don't think there has been any
definitive conclusions on that topic. So again, it's still an
(11:55):
uncertain area.
Speaker 2 (11:57):
And I wouldn't say that I.
Speaker 3 (11:58):
Have seen a lot of examples of internal controls for
ESG data that are the same as the internal controls
for the financial data that's going into SEC filings for example. However,
it should be something other than there's someone in a
corner who has as a side of their desk task
(12:19):
pulling together all of the information that will go in
the sustainability report.
Speaker 2 (12:23):
Needs to be more robust than that.
Speaker 4 (12:26):
So the one size fits all model is really tricky
when it comes to ESG. There's no one company model,
and the SEC is not the only entity looking into
how companies should be disclosing ESG data. Are there any
unique challenges for companies that operate across state lines, domestically
or internationally in jurisdictions such as the EU.
Speaker 3 (12:49):
Yes and no, And I think it depends more on
the business model and the customers and other stakeholders than
it does the location of the company. With the obvious
exception that companies located in the EU are subject to,
(13:13):
for example, are subject to different requirements than companies that
are based in the US. But if they are marketing
into the EU, or they have investors that are in
the EU, then those same requirements can trickle down to them.
(13:35):
Basically because of what we talked about earlier about investors,
for example, requesting information from these US based companies. Sometimes
they're asking because they have their own bespoke reporting that
they're doing, and sometimes they're asking because they have regulatory
requirements that apply to them and they need the data
(13:58):
from their supply chain in order to comply with their
own reporting requirements. So I think the influence of those
requirements that are coming from non US jurisdictions can still
have a significant impact on US based companies. And as
(14:20):
far as operating across state lines, for example, I think
it's the same thing. So if you have a fund,
for example, a US based fund, and you would like
to attract public money from both a state that restricts
the consideration of ESG factors when it comes to investing
(14:46):
public money and another state that is requiring the disclosure
of certain ESG type data. It's not that you can't
do both of those things. It's just that you have
have to be very careful about how you're approaching the
satisfaction of both needs on both sides. So again, as
(15:10):
Rob said, your lawyer is your best friend. Here, it
can be done. It is just tricky.
Speaker 4 (15:17):
And speaking of navigating tricky waters, those that have been
following this space have been bombarded by the term greenwashing
in recent years. Companies are now more than ever trying
to balance promoting their environmental efforts with the risk of
doing so in a way that could be potentially misleading.
What are the key differences from a legal standpoint between
(15:39):
making a good faith effort to talk up a company's
sustainability efforts and green washing.
Speaker 3 (15:46):
I don't want to sound like a broken record here,
but again, this all goes back to the internal controls
that we've been talking about.
Speaker 2 (15:53):
So a good faith effort has as its.
Speaker 3 (15:56):
Foundation confidence and the accuracy of the data that's being
reported on. I don't think this is an area where
puffing for marketing purposes is a good idea at all.
Assumptions also need to be carefully explained. So if you're
reporting data based on estimates and based on assumptions, that
data should be accompanied by a very clear explanation of
(16:21):
those assumptions and those estimates. If there are no serious
controls in place, or the assumptions that are being made
or unreasonable, then the greenwashing risk is there. But as
long as you have the internal controls in place, I
think you should the companies should feel free to talk
about all the good work that they're doing in this space.
Speaker 1 (16:40):
And if I could just interject here, does materiality play
into it at all. I mean one of the things
as a financial honist, I look at financial materiality. I've
seen in some companies disclosures. I'm not going to name names,
but I've seen a bank report about a whole page
and their sustainability report about all the amount of paper
they're saving from you know, you know, using electronic communications.
(17:06):
But then there's a footnote at the bottom saying, you know,
paper consumption is not material according to I think it
might have been sasby at the time, But you know,
does that play into it at all? Or is it
just as long as the data is good, it's fine
and disclose it even if it may not be that
relevant to investors.
Speaker 2 (17:24):
Yeah, that's a really great question.
Speaker 3 (17:25):
I think materiality really comes into play where we're talking
about mandatory disclosures more so than when.
Speaker 2 (17:34):
We're talking about voluntary disclosures.
Speaker 3 (17:36):
So I see that come up a lot when a
company wants to report on in your example, paper consumption
in its sustainability report, but doesn't want the fact that
it did so to trigger a requirement to include information
about paper consumption in its SEC filings. But I do
(17:59):
think it is it's an important consideration whether the inclusion
of so much immaterial information could be greenwashing because if
you only include immaterial information in your ESG report, and
you're excluding lots of information that is material.
Speaker 2 (18:21):
Because this is all voluntary, right, even if you're following.
Speaker 3 (18:25):
A framework, there are options to exclude information if you
can explain why you're doing that. So, if you have
a fully immaterial ESG report, which I don't think this
is an extreme example.
Speaker 2 (18:42):
I don't think this happens a lot. But if it were.
Speaker 3 (18:46):
The case that your entire report is immaterial, could someone.
Speaker 2 (18:51):
Accuse you of greenwashing? I think so So I think.
Speaker 3 (18:54):
I'm not saying that you could. Only you should only
include information in your ESG report if you're willing to
also talk about it in your SEC filings. I think
that's an important consideration, and you should really understand why
you're making that decision because maybe it's not material to
you for for mandatory reporting requirements, but you have an
indication from your stakeholders that they want that information from you.
(19:17):
I think that's a reasonable basis to include information, right.
Speaker 1 (19:20):
I mean, I'm I'm definitely you know, love to pound
the table disclosure disclosure, disclosure, but I think you know
there can be a risk of information overload if they're
just you know, throwing a bunch of information that you know,
maybe out of context. You know it's truthful, and you
know some some stakeholder might care about it, but you know,
when analyzing companies, you know, major esg. Profile, maybe it's
(19:44):
not as helpful.
Speaker 2 (19:45):
Yeah. Absolutely, I think too much information can.
Speaker 3 (19:49):
Be unhelpful, and not every stakeholder is necessarily going to
get a vote when it comes to what.
Speaker 2 (19:57):
Ultimately goes into the report.
Speaker 3 (20:00):
But you know, if a major stakeholder or multiple stakeholders
want the information, again, I think it's a reasonable decision
to include it, even if technically it's not material.
Speaker 4 (20:11):
Greenwashing comes up in a ton of context and a
lot of different iterations. But what about sustainable debt lenders?
A recent Bloomberg Law or Bloomberg article revealed that more
sustainable debt lenders are seeking declassification clauses to mitigate the
legal risks of greenwashing. In your view, do greenwashing legal
(20:33):
risks differ for issuers of sustainable debt?
Speaker 3 (20:37):
No, I think the greenwashing risks are exactly the same,
they just may manifest differently. So I think the main
issue discussed in that article, is that what a reasonable person,
if I may paraphrase, what a reasonable layperson may understand
is meant by a sustainability link loan may be different
(20:57):
from what the terms of the loan actually when it
comes to the consequences of failure to meet the stated
sustainability goals.
Speaker 2 (21:06):
So again it comes down.
Speaker 3 (21:07):
To ensuring that what is being disclosed is accurate and
not just accurate to those who have access to or
who can understand the fine print. It really needs to
be manifestly easy to understand by a reasonable person and.
Speaker 2 (21:26):
Not attackable as hiding the ball.
Speaker 3 (21:35):
And I think that was kind of if I were
to summarize one of the issues discussing the article.
Speaker 4 (21:41):
Yeah, I think it's really an issue of the audience.
So many people are interested in this ESG data and information,
and there's definitely a difference in the understandability and who's
looking at it. So on the other end of things,
in the last year or two, green hushing has started
(22:01):
to pop up, a sort of swing of the pendulum
back from greenwashing. Does underrepresenting sustainability efforts actually do anything
to mitigate legal risks when it comes to environmental representations.
Speaker 3 (22:14):
It's a really great example of how ESG factors need
to be considered holistically, so you can't put winers on
just focus on the E and don't think about the S,
or just focus on governance, don't think about any social impact.
Green hushing can reduce certain types of risks, and it's
(22:35):
always a good idea to be very confident that what
is being disclosed as accurate as we've been discussing, and
to review data that has already been disclosed to make
sure it is still accurate and adjust accordingly if it isn't.
Speaker 2 (22:48):
So if you how to report from.
Speaker 3 (22:52):
Twenty twenty and looking back on it now, you would
have changed some things in that report, it's quickly reasonable
to re word the description of certain topics in your
current report. However, if you go so far as to
(23:12):
say that you're not doing things that you actually are doing,
that's just another form of misrepresentation. So it's green hushing
that is also a material miss representation and can cause
the same types of issues that other types of material
miss representations can cause. So it's just another type of
inaccuracy and it could come back to haunt a company
(23:33):
when a stakeholder who wants the company to be doing
those things comes calling. So for example, if you're pulling
back what you're saying to appease an anti ESG state,
but you also have operations or consider it a pro
ESG state to be important, you don't want to be
in a position where you're having to explain yourself to
(23:55):
the pro ESG.
Speaker 2 (23:58):
State representatives that you were just trying to appease the
anti ESG states.
Speaker 4 (24:06):
Yet another example of how this state situation is causing
a headache for us.
Speaker 2 (24:10):
Absolutely great.
Speaker 1 (24:13):
I want to switch gears a little bit talk about
private companies. I mean, we touched on this a little
bit with the whole pre IPO phase, but you know,
there's there's a whole range of private companies, whether it's
you know, fifth generation family owned, it's held by private equity,
or whether they're ultimately looking to go public soon. Just
does that change the requirements or how they think about
(24:35):
disclosing and also you know, whether it's disclosing new investors
or maybe as you talked about disclosing new a customer
as part of their legal requirements. You know, how how
should private companies think about this and how might that
differ from public companies.
Speaker 2 (24:51):
That's a great question.
Speaker 3 (24:52):
I think the first thing that comes to mind, because
I've been getting a lot of questions from private companies
about this, is the set of California bills that have
been passed recently that apply to private and public companies.
And it's a really great example of how companies can't
(25:15):
just ignore rules that are coming out that will only
apply to public companies. One, because there's this example of
a set of rules that are very similar to the
SEC proposed climate disclosure rules in many ways that will
apply to them as long as they're doing business in California.
(25:37):
We don't know exactly what that threshold will be, but
we can assume for now that it will be very
easy to trigger threshold.
Speaker 2 (25:45):
And for those companies that have been.
Speaker 3 (25:49):
Basically ignoring developments with respect to the SEC rule are
finding themselves flat footed now that the California bills have
been passed. There are also things in those rules that
apply to public companies that are just a matter of
uh good governance potentially that should be considered as well. So,
(26:12):
for example, there are requirements to disclose how climate risks
are being handled at the board level and at the
management level. Those are good things to think about regardless,
even if you're not required to disclose those things. There
are also other rules that apply to private companies, depending
(26:34):
on the industry that they're in, that are also very
similar to the rules that applier will apply to public
companies regarding the management of climate related financial risks. So,
for example, certain US banks are subject to regulatory requirements
when it comes to the management of those risks, and
insurance companies as well. So, I you know, for private companies,
(26:58):
I think a good place to start is with the
requirements that pop up in multiple places that will apply
to them, whether they are public or private. And then
a second thing to think about is also the requirements
that apply to public companies That are just.
Speaker 2 (27:17):
Good things to think about. Whether they actually adopt.
Speaker 3 (27:21):
The practices that those non applicable rules would require them too,
it may be a good idea.
Speaker 4 (27:29):
So you've mentioned both the SEC's hopefully finalized to Climate
rule and the forthcoming California rule. They both face almost
certain litigation once they're finalized. As far as litigation strategy
goes around these issues, is there a benefit to litigating
rules that the industry just doesn't like.
Speaker 3 (27:51):
Well, especially now with the major questions doctrine coming out
of this Supreme Court West Virginia b EPA case. It
is certainly reasonable for the industry to consider litigation or
supporting litigation if the rules are arbly, if the rules
(28:15):
arguably fall within the Major Questions doctrine. Because following that case,
especially certain courts are not referring to Chevron difference as
much to simply dismiss claims challenging a new rule. So
some of that litigation has been very successful in at
least staying rules, if not completely overturning them, which can
(28:37):
result in significantly more compliance time, and that benefit alone
could make it worthwhile to consider litigation.
Speaker 4 (28:48):
And do you have any sort of tips for companies
that are looking to ramp up these ramp up compliance
with these new rules if they are likely to be
struck down or at least for some time.
Speaker 3 (29:02):
Absolutely, And I think this really depends on how far
along the company is on their ESG related reporting journey,
and especially their greenhouse gas emissions journey. Greenhouse gas emissions
reporting pops up in so many different places, as we
(29:24):
have been discussing, it might pop up in a role
that applies to the company, It might pop up in
a role that it applies to a company that.
Speaker 2 (29:35):
Another company is a major supplier to, So.
Speaker 3 (29:38):
Even if the roles don't apply to the supplier effectively,
they will certainly. Outside of the US, greenhouse gas emission
reporting in alignment with TCFD is very prevalent. That's where
a lot of countries are gravitating toward when it comes.
Speaker 2 (29:58):
To mandatory disclosure.
Speaker 3 (30:00):
So there are certain areas that it makes a lot
of sense to focus on because the company is likely
to have to do that type of reporting anyway. And then,
as we talked about before, thinking about the things that
are good ideas from a government's perspective anyway always makes sense.
Speaker 4 (30:22):
We've talked a lot about climate climate related financial risks
and greenhouse gas disclosures, but the ESG disclosure landscape is
really vast. Do you anticipate the industry sort of collaborating
in litigation strategy in the future and that being sort
of a lasting threat for the ESG space.
Speaker 3 (30:44):
I think that that will be the case in the
short term, but the rest of the world is moving ahead,
and eventually if there's this bifurcation of requirements, depend on
whether a company is solely focused on its US operations
(31:06):
versus companies that operate globally, there may be less of
an inclination to collaborate within the industry if a huge
chunk of the industry is subject to those other requirements anyway,
it may not be the best use of their time
(31:28):
to try to fight US requirements that would simply mirror
the requirements of the non US jurisdictions to which those
big global companies are subject to anyway.
Speaker 1 (31:42):
Now, Danielle, you've talked about the different rules and how
they're kind of you know, even if the US is
kind of slow playing it, the rest of the world
is going to kind of drag them forward. But is
there a risk that as you have different frameworks being
built up in different parts of the world that may
apply globally, that there's going to be some contradictions or
(32:04):
how should companies think about navigating those I think.
Speaker 3 (32:07):
We're seeing that issue already come up, certainly with respect
to what I'm hearing privately. It's a huge concern with
the big global companies because it's not only the regulators
that are requiring slightly different things just like this, annoyingly
(32:29):
slightly different, almost the same but not quite. It's also
the bespoke reporting that they're being asked to do that
falls within that category of voluntary, but not really, because
investors are requiring their own data that they need for
their own purposes, and dealing with all of those things
(32:51):
at the same time.
Speaker 2 (32:53):
Requires a lot.
Speaker 3 (32:54):
Of resources, and especially given the uncertainty with some of
those including the EU requirements, which are still being worked
out to a large degree, spending all.
Speaker 2 (33:09):
Of those resources on that.
Speaker 3 (33:12):
Type of work is something that it's causing fatigue to
be frank and I think ultimately will lead to consolidation
of frameworks, which we're already starting to see, but it's
very slow going.
Speaker 2 (33:28):
But I think that's the direction.
Speaker 1 (33:29):
We're going in now. I think the extreme case is,
you know, we've heard about what happens if say Texas
or Florida passes a law that makes it illegal to
disclose what the California rules asking for it. First of all,
is that even possible? And second of all, how would
that ultimately play out.
Speaker 2 (33:47):
I've heard that question come up a few times. I don't.
It's hard for me to envision that happening because I don't.
Speaker 3 (33:58):
I'm just not aware of any other example of a
prohibition of disclosing certain data that's other than in the
privacy context, right, what would be the basis for prohibiting
a company from disclosing climate related data?
Speaker 1 (34:18):
I mean, I agree one hundred percent, but it's also
the world we're living in today unfortunately. Okay, Danielle Abigail,
thank you so much for joining. You can find more
information on topics like ESG compliance by going to BI
ESG go on the Bloomberg terminal, or read some of
Abigail's work via Bloomberg Law dot com. If you have
(34:40):
an ESG quandary or a burning question you'd like to
ask bi's expert OLiS analysts, send us an email at
ESG Currents at Bloomberg dot net
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Nikki Glaser Podcast
Every week comedian and infamous roaster Nikki Glaser provides a fun, fast-paced, and brutally honest look into current pop-culture and her own personal life.