Environmental, Social and Governance (ESG)
- Environmental, Social and Governance (ESG) describes the increasing focus on a broad array of non-financial aspects of a business that are used to evaluate the way in which that business relates to local, national and international communities.
- Holland & Knight advises clients on three major aspects of ESG issues: disclosure, financing and supply chain management.
- In each of these areas, our team brings to the table highly experienced and knowledgeable lawyers in the key areas of climate and sustainability, diversity, equity and inclusion (DEI), corporate governance, financing, financial regulations, securities, executive compensation, data privacy and security, and litigation.
Holland & Knight helps clients develop, organize and execute Environmental, Social and Governance (ESG) strategies that increase ESG scores, protect directors, satisfy activist and institutional shareholders, mitigate regulatory compliance risk, increase market capitalization, and answer the ever-increasing demands for clients to respond to calls for environmental and social change.
Our approach to ESG is comprehensive, practical, manageable and affordable. We use a disclosure-based solution designed to drive efficiency and provide results immediately without requiring significant operational changes.
Holland & Knight's Environmental, Social and Governance Practice advises clients on three major aspects of ESG issues:
- Disclosure. We provide pragmatic advice relating to the preparation of ESG disclosure for the purpose of satisfying board oversight responsibilities, institutional investors, proxy advisory services, activist shareholders and employees. In this capacity, our lawyers are often called upon to draft disclosure, design ESG strategies, prepare board presentations and establish ESG action plans.
- Financing. Our ESG financing team advises financial services clients in the design and issuance of green and ESG-related financial products, and we counsel companies across various industries in procuring and complying with these products. Our team has been recognized for its innovation in structuring and executing ESG-related credit and debt capital market transactions, including green, social and sustainable financing deals consistent with International Capital Market Association (ICMA) and Loan Syndications and Trading Association (LSTA) standards.
- Supply Chain Management. As companies make their own ESG commitments and interact with third party vendors that may have different ESG priorities, supply chain management is becoming even more complex. Our lawyers' understanding of the origins of ESG-related vendor commitments allows us to counsel our clients through this labyrinth of contractual provisions. Our understanding of market standards, unintended consequences of various provisions, and when it is reasonable to compromise positions us to support clients in their efforts to avoid business disruption and advance their ESG goals.
Action-Based Approach to ESG Profile Enhancement
We provide tangible advice that encourages clients to take immediate action steps and create a framework for future disclosure efforts. Our approach signals a clear commitment to ESG best practices that goes far beyond providing advice around the edges of this business-critical and dynamic practice area.
We understand that improving proxy advisory scores requires tactical planning and step-by-step execution. Below are the action steps that we encourage companies to take, regardless of industry, in order to enhance their ESG profile and ESG scores:
1. Initial ESG Overview Presentation to Management
2. Initial ESG Overview Presentation to Board
3. Collect All Available Public Data in Addition to Data and Reports from Internal Sustainability, DEI and Cybersecurity Functions
4. Request/Review ESG Scoring by Proxy Advisory Firms
5. Meet with Company's Sustainability, DEI, Social Impact, Cybersecurity and Supply Chain Management Functions to Coordinate Disclosure and Action Responses
6. Prepare ESG Governance Structure
- Amend Nominating /Governance Charter to Provide for ESG Oversight
- Establish ESG Management Committee
- Update Risk Policy Manual
7. Establish Peer Group Matrix Showing Status of Peer Group Position on ISS, SASB, TCFD and Specific Institutional Shareholder ESG Components
8. Prepare Gap Analysis versus Peer Group Position on ESG Component Map
9. Draft ESG Action Plan for Addressing Gaps
10. Draft Initial ESG Disclosure for Form 8-K and Company Website
11. Management Presentation Re: ESG Disclosure and Action Plan
12. Nominating/Governance Committee Presentation re: ESG Disclosure and Action Plan
Holland & Knight's ESG advisory services support our clients' efforts to create a practical ESG reporting methodology that can be enhanced year-over-year in alignment with business growth, competitive analysis and regulatory requirements.
ESG Process and Infrastructure Development
- Presentation of ESG process to board of directors
- Amendment of Audit, Risk or Nominating/Governance Committee Charter to provide ESG oversight
- Ongoing analysis of ESG scoring by proxy advisory firms
- Establishment of ESG governance structure
- Empowerment of ESG operational committee
- Risk analysis of climate change, pandemic preparedness, data privacy and cybersecurity, and social and economic justice issues
- Design of ESG reporting methodology and disclosure processes
- Review and analysis of current peer company ESG practices
- Drafting ESG disclosures
- ESG-related training, including an emphasis on diversity and inclusion best practices
- Reviewing and coordinating "second party opinions" provided by top ESG consultants and verification providers
- Review and development of data breach incident response plans and crisis management protocols
- Cybersecurity insurance evaluation
- Review and design of DEI programming, including best practices for measuring and reporting data
ESG Certification, Attestation and Audit-Related Services
- Responding to third-party audit inquiries
- Negotiating with third-party auditors and navigating aggressive audit inquiry requests
- Conducting due diligence related to mergers and acquisitions
ESG Advocacy and Litigation Defense
- Proactively and collaboratively engaging federal and state regulatory agencies when dealing with complex or novel issues, including financial services regulations relating to climate risk
- Advising on enforcement inquiries from state attorneys general, the Federal Trade Commission (FTC), Office of the Comptroller of the Currency (OCC), U.S. Securities and Exchange Commission (SEC), and other state and federal regulatory entities
- Defending ESG-related litigation claims (e.g., allegations of "greenwashing," securities fraud, common law fraud and violations of consumer protection laws)
Green and Sustainable Financing
- Structuring new green and sustainable finance products and services (i.e., green deposits) to maximize client goals while minimizing compliance burdens and risks
- Drafting, negotiating and executing ESG-driven financings, including green loans, social loans, green bonds, sustainability linked loans, renewable energy project finance (including carbon capture and green hydrogen), solar tax equity, affordable housing, water infrastructure and more
Supply Chain Management
- Our team regularly counsels clients through ESG issues associated with complex supply chain contractual provisions. We know both what is reasonable on a provision-by-provision basis and we understand the underlying purpose of each provision.
- Our services in this area function to bolster our clients' ESG profiles while reducing ESG-related risk, including review of supply chain due diligence and customs compliance programs, and responding to forced labor inquiries and audits.
Energy Transition Support
- As more investors and companies seek greater clarity and confidence in accounting for long-term climate risks and opportunities, businesses are undertaking a transformation – shifting from traditional fossil-based systems of energy production to consumption of renewable energy sources and implementation of clean technology.
- We support clients moving toward an energy transition by leveraging our years of experience in the oil and gas sector as well as the traditional core renewable energy markets (solar, wind, hydro) and applying our extensive knowledge of newer technologies such as battery storage, anaerobic digestion and RNG, green hydrogen and hydropower, carbon capture utilization and storage, carbon trading, electric vehicles, energy distribution/ transmission, energy efficiency, smart cities, microgrids and gas-to-power projects.
Key Subject Matter Experience
Our ESG Core Team is supported by nationally recognized lawyers across our platform who have decades of experience advising clients on business and legal risks in key practice areas that impact the multitude of indicators included in ESG scoring.
- Energy. Holland & Knight's Energy and Natural Resources Industry Sector Group represents a wide array of stakeholders operating in conventional energy markets or on the cutting edge of renewable energy finance, development, regulation and delivery, helping them to meet the opportunities and challenges presented by today's marketplace.
- Environment. Our national environmental lawyers provide in-depth insight to clients regarding complex issues associated with climate-related commitments, including challenges associated with climate investment, community engagement and civil rights.
- Executive Compensation. Our Executive Compensation and Benefits Team is at the forefront of the trend to tie compensation to ESG-related achievements. Our executive compensation lawyers consult, in the ESG context, on compensation disclosure, proxy advisory reviews and complex equity compensation design.
- Data Privacy and Cybersecurity. Leveraging our team members' U.S. Department of Justice (DOJ) prosecutorial experience, extensive technical background and sophisticated cybersecurity insurance know-how, we provide pragmatic counsel to clients preparing comprehensive ESG disclosures.
- Diversity, Equity and Inclusion. DEI has generated significant attention in the media and from institutional investors who are now incorporating DEI considerations within their investment processes. Our professionals help clients design DEI programs and strategies incorporating transparent metrics and key performance indicators.
- Financial Services Regulatory. Financial services companies are affected by ESG pressures in unique ways. Our leading financial services regulatory practice gives us a particular understanding of the impact of ESG on these companies. Our team advises regulated financial institutions on federal and state regulatory issues involving ESG, including strategic transactions, climate risk vulnerability and disclosure, risk management and stress-testing frameworks, and related governance matters.
- Securities Litigation. Our former SEC officials, including the SEC's former chief risk officer and SEC senior officers, provide boards and senior management with intimate insight regarding ESG disclosure and risk mitigation strategies, and represent clients in SEC enforcement actions and investigations. Our securities litigation team defends public companies as well as their officers and directors in class actions and shareholder derivative actions.
- Anti-Counterfeiting, Anti-Trafficking and Anti-Money Laundering. Our deep bench of former U.S. attorneys and assistant U.S. attorneys provide ESG-related consultation and training to boards and companies on anti-counterfeiting, anti-trafficking and anti-money laundering measures.
- Human Rights. Holland & Knight's experienced customs attorneys and international trade policy professionals assist clients with monitoring and ensuring compliance with the rapidly evolving forced labor legislative and regulatory landscape, the development and review of supply chain due diligence and customs compliance programs, and responding to forced labor inquiries and audits.