Yesterday, the Securities and Exchange Commission announced a newly created Climate and ESG Task Force in the Division of Enforcement. The announcement is a reminder for public companies, investment advisers and funds to prepare for increased enforcement scrutiny regarding ESG disclosures, plans, and investment products. The new task force also is the latest signal of an effort to portray an SEC enforcement program that is both more aggressive and increasingly focused on specific policy objectives.…

SEC Chair Hearing.  Yesterday, the U.S. Senate Committee on Banking, Housing, and Urban Affairs held a nomination hearing to consider Gary Gensler’s candidacy for Chair of the Securities and Exchange Commission, or SEC. Throughout the hearing, Gensler fielded numerous questions on environmental, social and corporate governance and disclosure matters. This post synthesizes the most salient points from his testimony. The post also provides information on the SEC’s 2021 examination priorities and legislative bill activity occurring…

The Federal Reserve’s final guidance on board of directors’ effectiveness (Board Effectiveness Guidance) is a key milestone in its multi-year review of the practices of boards of directors, particularly at the largest banking organizations.  This memorandum describes the final Board Effectiveness Guidance and highlights key changes from the proposal.  It also describes its interactions with fiduciary duties and listing requirements. The Federal Reserve also announced the results of its review of 27 SR letters which…

Yesterday, the SEC released a statement on climate change disclosures. The statement directs the SEC staff to review company disclosures against its 2010 climate change disclosure guidance. In light of these events, this client alert provides our prior comprehensive summary of the SEC’s 2010 guidance and identifies what issuers should do in the short and long term to be prepared for future regulatory action. Read the full alert here.…

On February 8, 2021, ISS announced the updated methodology guide the firm uses to determine a company’s Governance QualityScore (GQS), its proprietary rating system designed to help institutional investors assess companies for governance quality and risk. Seventeen new factors have been added, which ISS states is the largest GQS methodology release in recent years. What GQS Measures GQS is a decile-based score meant to indicate the corporate governance risk relative to other companies in a…

Yesterday, BlackRock released its annual Letter to CEOs, which is also commonly referred to as the “Fink Letter.” With the firm managing approximately $9 trillion in assets, this open letter is widely read by public companies, market participants and other stakeholders to better understand the mega investor’s outlook. This post boils down BlackRock’s 2021 letter to what we think is its essence. Not surprisingly, climate risk remains a top focus area. “No issue ranks…

On the heels of our post of our summary deck yesterday on Nasdaq’s December 2020 Board Diversity Proposal, the SEC announced last night that it needs more time to consider Nasdaq’s proposal and associated comment letters.  With the extension, the SEC has until March 11, 2021 to either approve or disapprove the proposal, or institute proceedings to aid its determination.  While the notice is silent on a new comment letter submission deadline, the SEC…