Notably, there has been an increasing trend of companies including this disclosure in their Form 10-Ks as well as their proxy statements. So far in 2020, employee welfare, health and safety and business continuity issues have taken the spotlight in quarterly reports filed with the SEC. On February 9, 2022, the U.S. SEC proposed Rule 206(4)-9 under the Investment Advisers Act of 1940 and Rule 38a-2 under the Investment Company Act of 1940. Farient Advisors LLC's partner Marc Hodak The Global Sustainable Investment Alliance's latest investment review shows that global sustainable investment now tops US$35 trillionup 15% in two years, and in total equating to 36% of all professionally managed assets. To say the SEC has signaled increased attention to ESG matters would be an understatement. With respect to Form 10-Ks, the ESG topics that saw the highest increases in disclosure were (1) environmental and sustainability matters, (2) human capital management, and (3) corporate culture and supply chain management (tied). The complaint notes various statements in the company's SEC filings during the class period to the effect that its "disclosure controls were effective, in all material respects." The 2020 baseline of ESG disclosure in SEC filings, prior to the pandemic's impact on U.S. public companies, is reflected in annual meeting proxy statements and annual reports filed with the SEC by the top 50 companies2 by revenue in the Fortune 100. The most efficient and effective way to ensure that investors have the ESG information they seek is for the SEC to write its own ESG disclosure rules. Climate Change (in 13 of the 29 filings). Our shareholder engagement program is a robust, year-round process encompassing meetings held throughout the year with shareholders during which we encourage ongoing, meaningful dialogue about the issues they find most importantOur Board reviews our annual meeting results, ongoing shareholder feedback and corporate governance and compensation trends to help drive and develop our shareholder engagement prioritiesWe respond to shareholder feedback by enhancing our policies, practices and disclosures informed by ongoing dialogue with our shareholders and communicate important updates and enhancements made during the fiscal year in our proxy statement., Mention of Specific E&S Issues Discussed, for example: Recent Board discussions have addressed shareholder feedback on a variety of topics, including Board refreshment, shareholder proposals, executive compensation, sustainability and human capital management and political advocacy, often resulting in changes to our policies and practices as well as guiding the focus of future discussions in the boardroomWe also fulfilled our commitment to publish our first Sustainability Report and publicly disclosed our workplace diversity data, including our consolidated EEO-1 report. It is interesting to note that 34 companies disclosed that they allocated responsibility for oversight of ESG issues to more than one committee (up from 21 in 2021), with six companies disclosing that they allocate responsibility to four committees and five companies disclosing allocation of ESG oversight to five committees. Given the SEC's comment letters on climate disclosure & the fact that everyone knew a climate . [3] In these 100 SEC filings, we focused on 12 categories [4] of ESG disclosure in annual reports and proxy statements filed with the SEC in 2020, 2021 and 2022. For example, SEC Chairman Jay Clayton noted that E, S, and G are "quite different baskets of disclosure matters and that lumping them together diminishes the usefulness, including investor understanding, of such disclosures. ", Education (in 9 of the 21 filings). Never compromise ethics. New approval based on TADPOLE trial showing overall response rate (ORR) of 47% and median progression-free survival (mPFS) of 20.1 months for Tafinlar + Mekinist compared to 11% ORR and 7.4 months mPFS for standard of care1,2 Approval also received for liquid formulation options for ease of administration across multiple approved indications Basel, March 16, 2023 Novartis today announced . The increase in disclosure on board oversight of ESG issues was also notable because it moved up from the sixth to the fourth spot in 2020 for increases in ESG disclosure, signifying the heightened focus on this type of disclosure in 2020. For further information, please visit the White&Case Coronavirus Resource Center. In the survey, we also reviewed whether the disclosure was only qualitative or both quantitative and qualitative in nature. In 2022, only one company disclosed its reporting frameworks solely in its Form 10-K, whereas six companies made this disclosure in both their Form 10-K and proxy statements, and 31 companies made this disclosure exclusively in their proxy statement. The petition is available here. Thirty-two companies made this disclosure only in their proxy statement, two only in their Form 10-K and six included the disclosure in both filings. From a governance perspective, the SEC's proposed ESG rule follows a similar blueprint seen in its recent cybersecurity rule proposal , specifically requiring disclosure addressing, among other things, processes for how boards and management are informed of climate-related risks. Between . Moreover, it is important to acknowledge the continuing trend of companies providing most ESG reporting on corporate websites, rather than in SEC filings. We also published our first [TCFD] report in 2021 to assess our climate-related risks and opportunities and better understand the potential impacts on our value chain., Disclosed following more than one standard, for example: We are committed to transparency around our carbon footprint and climate risk and use the framework developed by the TCFD to inform our disclosure on climate governance, strategy, risk management, and metrics and targetsOur Corporate Responsibility Report also includes a mapping of our disclosure to the TCFD, the [SASB] framework, and our CDP Climate Change Survey, all of which are available on our website.. More than 95% of the Fortune 50 now include some ESG disclosures in their SEC filings. In this article, Sean Wilke . We achieve pay equity by closing the gap in average pay between employees of different genders or race/ethnicity in the same or similar roles after accounting for legitimate business factors that can explain differences, such as location, time at grade level, and tenure., On Employee Wellness and Flexible Working, for example: Our offices and sites once again closed Company wide for one day in May 2021 to allow colleagues to recharge In 2021, in recognition of the new way of working, we initiated [ Flex, a hybrid model that empowers our office based employees to find the right productivity and balance of in person and remote work.. In addition, our annual Voice of the Associate surveyserves as our primary means of gauging associates level of engagement within their roles. Overall, 43 of the surveyed companies (or 86%) increased their climate-related disclosure in their 2022 Form 10-Ks, and 35 companies (or 70%) increased this disclosure in their 2022 proxy statements. Thirty companies (or 60%) disclosed that their Nominating and Corporate Governance Committee (NGC) oversaw some or all ESG Matters, up from 12 in 2021 (a 150% increase). Two of the four companies agreed to additional risk factor and/or Management Discussion and Analysis (MD&A) disclosure. Attorney Advertising. Representative examples of these disclosures include the following: We released our 2021 [DEI] Report, in which we provide workforce diversity data, (including our EEO-1 data) and explain how we are working to drive progress through our pillars of action: public policy, workforce diversity, community engagement and supplier diversity., As part of our Health for Humanity Report publication in June 2021, we publicly disclosed our U.S. Federal Employer Information Report EEO-1, and we annually publish the You Belong: Diversity, Equity & Inclusion Impact Review (DEI Impact Review), which examines how the Companys global DEI strategy has been a key driver of innovation and business outcomes since our founding over 130 years ago.. Sixty-one of the 2022 filings surveyed increased their disclosure on corporate culture, compared to 33 of the 2021 filings surveyed and 28 of the 2020 filings surveyed. Watch a Summary ON THIS PAGE Board Disclosure TCFD SFDR Green Bond Market EU Taxonomy U.S. ESG Policy Insurers Our shareholders also expressed continued interest in the Board's oversight of opioid risks, the Company's ongoing compliance efforts to managing the opioid issue and clarifications to our Political Contributions and Lobbying Policy, including Board oversight. In July 2020, the NYC Comptroller, on behalf of three New York City Retirement Systems with over $200 billion in assets, sent a letter to the CEOs of 67 S&P 100 companies calling on them to adopt a policy to publicly disclose diversity data with a comprehensive breakdown by race, ethnicity, and gender in 10 employment categories, including senior management, and provide a written commitment to do so by August 30, 2020 or face the risk of a proposal on this topic submitted to a shareholder vote.7. For example: "In the fall of 2019 and into early 2020, we conducted a second round of engagement with stockholders representing about 28.0% of our outstanding shares in a series of meetings that focused on sustainability issues, including climate change and human capital management. Our climate change strategy is based on mitigation, resilience and enablement. An effective ESG disclosure system does not imply a rigid and soon-to-be outdated set of limited disclosures. ", Increase in Environmental Quantitative Metrics. In 2022, 38 of the surveyed companies disclosed in their SEC filings that their sustainability reports posted on their website follow or align with specific reporting frameworks, a significant increase from 26 in 2021, 11 in 2020 and just one company in 2019. ; Significant impacts from a wider stakeholder perspective (i.e., reporting on ESG matters material to the company's impact on the economy, environment and . We understand that climate change poses risk and presents opportunities for our business to address such impacts in several ways. For the surveyed companies, references to climate-related impacts increased by seven mentions on average and five companies added new sections discussing ESG, sustainability and climate change in their MD&A. *number of filings in which the disclosure in the relevant category increased. In addition, there were proposals relating to industry-specific climate risks, such as water-related risks at food and energy companies and stranded carbon assets at energy companies, as well as proposals to assess or report on the impact of particular sustainability initiatives implemented by the company. The company has a 50 day simple moving average of $34.83 and a 200-day simple moving average of $34.25. Six ways to get ready for SEC climate disclosure rules How can you prepare for SEC climate reporting requirements? Environmental, Social and Governance (ESG) Disclosures. The key trends and takeaways from our survey are discussed below. Every company surveyed increased its ESG disclosures in at least one category in their proxy statements between 2019 and 2020, and 21 companies (or 42%) also increased their ESG disclosures in at least one category in their annual report on Form 10-K between 2019 and 2020. Environmental shareholder proposals took center stage in shareholder proposals during the 2020 proxy season, with a meaningful increase in the number of environmental proposals submitted and in the level of support for such proposals.10For example, 82 environmental proposals were submitted to S&P Composite 1500 companies in 2020, with 24 making it to a shareholder vote, an increase from 69 proposals in 2019 and 18 reaching a shareholder vote in 2019. (See "Investors Press for Progress on ESG Matters, and SEC Prepares To Join the Fray.") Rule 10b5-1 sales/share repurchases. The DOJ's Newest Pilot Program on Compensation and Clawbacks: Executives and Employees Should Reap What They Sow Overall for 2022, the largest increase in categories of ESG disclosure was with respect to environmental matters (up from third on the list in 2021) which covered a range of environmental topics, including investments in sustainability, recycling and renewable energy use. Clawbacks have also been a hot topic among our clients. The Climate Pledge has been signed by [the Company] and over 300 other companies that commit to the same goalsPledge signatories in total generate over $3.5 trillion in global annual revenues and have more than 8 million employees across 51 industries in 29 countries., Climate Change Evaluation, for example: As part of our commitment to being good stewards of the environment, we are working to understand, quantify, and reduce our impact on climate change. Leverage the controllership organization to accelerate climate reporting 2. For example: "The Foundation works to improve the quality of education in the United States at all levels, with special emphasis on math and science. Our overall participation rate was 87%, 3% higher than in 2017. 17 For example, on May 5, 2020, the SEC's Investor Advisory Committee recommended that the SEC "set the framework" for issuers to report on material ESG information. In proxy statements, the greatest increases in disclosure were in the categories of (1) human capital management, (2) corporate culture, and (3) board oversight of ESG issues. An SEC-mandated ESG disclosure regime would impose new information-gathering and reporting obligations on companies that today do not prepare sustainability reports pursuant to whatever framework the SEC could adopt. In the European Union, ESG regulations like the green taxonomy and the Sustainable Finance Disclosure Regulation (SFDR) are changing the way companies do business. Responsiveness to Shareholder Feedback (in 18 of the 21 filings). 2 The companies in this survey are the top 50 companies by revenue in the Fortune 100 that file proxy statements and Form 10-Ks. Informed by those discussions, we made the following changes to our governance and compensation practices", Expanded ESG Engagements (in 8 of the 21 filings). The examples of ESG disclosure in this memorandum are from the following companies (listed in order of appearance): Comcast Corporation, 2020 proxy statement; Walmart Inc., 2020 proxy statement; Walmart Inc., 2020 proxy statement; Chevron Corp., 2020 proxy statement; Johnson & Johnson, 2020 proxy statement; Amazon.com, 2020 proxy statement; AT&T Inc., 2020 proxy statement; ExxonMobil, 2020 proxy statement; Apple, 2020 proxy statement; UnitedHealth Group, 2020 proxy statement; Citigroup, 2020 proxy statement; Pepsico, 2020 proxy statement; Pepsico, 2020 proxy statement; Intel Corporation, 2020 proxy statement; Walgreens, 2020 proxy statement; Boeing, 2020 proxy statement; ExxonMobil, 2020 proxy statement; AT&T Inc., 2020 proxy statement; Amazon.com, 2020 proxy statement; McKesson Corp., 2020 proxy statement; Home Depot, 2020 proxy statement; Citigroup, 2020 proxy statement; Intel Corp., 2020 proxy statement; Valero Energy, 2020 proxy statement; General Motors, 2020 proxy statement; Verizon Communications Inc., 2020 proxy statement. Prior results do not guarantee a similar outcome. Twenty-two companies (or 44%) increased disclosure on board oversight of E&S issues in their 2020 proxy statements. See the full recommendations here. The new regulation would require organizations to provide certain climate disclosures in its registration statements and annual reports. DFIN provides real-time access to the rapidly changing disclosure landscape. Invent the future and learn from the pastDemonstrate excellence in everything we do. As shown in the chart below, 89 of the 2022 filings surveyed increased their environmental disclosure, compared to 35 of the 2021 filings and 29 of the 2020 filings. "19The recent trend in the SEC's Disclosure Guidance in Topics 9 and 9A emphasizing particular topics that are ESG in nature, such as employee health and safety, for their inclusion in SEC filings, rather than "ESG" as a whole20, fits within the SEC approach of highlighting particular ESG topics that may be appropriate for inclusion in SEC filings, rather than "lumping" all of ESG into one disclosure bucket for purposes of SEC filings. GHG Reductions Goals, for example: The Companys environmental goals, collectively called Strive 35an ambitious plan to, by 2035, reduce from a 2019 baseline absolute Scope 1 and 2 [GHG] emissions by 25 percent, reduce absolute Scope 3 emissions by 25 percent, reduce energy intensity by 15 percent, reduce water intensity by 10 percent, and achieve a 90 percent landfill diversion rateare part of an aggressive plan to continue to reduce the [our] environmental footprintIn 2021, [we] added 5-year interim targets to ensure the Company stays on track to meet its 2035 goals. In 2022, 16 companies included this disclosure in their Form 10-Ks, up from eight in 2021 and one in 2020. We expect quantitative disclosures to increase, as investors heighten their focus on diversity disclosures in 2020. The impact of COVID-19 on corporate operations cannot be overstated, and investors are interested in how companies are responding in terms of safety, logistics, and operational continuity. On that day, for the first time in its history, the SEC proposed specific mandated disclosure rules On Employee Diversity, Equity and Inclusion, for example: Diversity, Equity, and Inclusion (DEI): Building a world where progress, equitable outcomes, diversity, and inclusion can be realities is at the heart of what we dofrom how we build our products to how we build our workforce. We use the feedback from these surveys to help improve the overall associate experience We also maintain a digital associate engagement platform that links associates with common interests and fuels connections to co-workers and Company leaders., On Talent Retention, for example: In 2021our Employee Engagement Index, an overall measure of employee satisfaction with the Corporation, was 88%. 9 and 9A, which both emphasize the importance of disclosing material information regarding employee matters due to the pandemic, such as employees' transition to remote working arrangements, the modification of operations to comply with health and safety guidelines to protect employees, and constraints on human capital resources and productivity. Quantitative E&S Goals and Targets. Salary 170000.00 - 300000.00 USD Annual. For example: "[We] continue to drive ethical sourcing practices across our supply chain, protecting human rights, supporting diverse suppliers and engaging with suppliers around environmental issues. This increase in Form 10-K disclosure, particularly on the environment, came on the heels of the September 2021 sample letter on climate disclosure. 15 For more information, see our prior alert "Blackrock Calls for Enhanced Sustainability Disclosure and Accountability for Directors." Eighty-six of the 2022 filings surveyed presented an increase in this type of disclosure from 2021 (up from 60 in 2021 and 35 in 2020), with 41 of these increases coming in the 10-K and 45 of these increases in the proxy statement. SPAC, cryptocurrency, and COVID-related actions accounted for 34 percent of all core federal filings, with 24, 23, and 20 filings, respectively, in 2022. For example: "[We] offer a wide variety of career opportunitiesand paths to advancement through on-the-job coaching, training, and education. For example: "During the past year, the Corporate Governance and Nominating Committee's oversight focused on, among other things [the company's] Corporate Responsibility Report and trends (including environmental sustainability, climate risk, human capital, human rights issues, and political accountability), and investor outreach and feedback.". 8 For more information, see our prior alert, "SEC Releases New Guidance on KPIs." 4 The 2018-2019 White & Case LLP Survey is available here. Overall, 47 of the companies surveyed included disclosure on corporate culture in their 2022 filings, compared to 44 companies in 2021 and 43 companies in 2020. That case was about a lack of controls to review employee complaints about workplace misconduct. This publication is protected by copyright. Our culture is based on our servant leadership philosophy represented by the inverted pyramid, which puts primary importance on our customers and our associates by positioning them at the top, with senior management at the base in a support role. Twenty-nine of the 2020 filings (or 29%) increased their environmental disclosure from 2019. In the 35 filings where there was an increase in HCM disclosure, the disclosure was three times more likely to come in a proxy statement, as opposed to an annual report, and included the following6: On Employee Diversity (in 29 of the 35 filings). 34. The complaint purports to be filed on behalf of investors who purchase the companies American Depository Shares (ADSs) between March 10, 2022, and March 15, 2023. Capex. ESG-related proposals have gotten a lot of attention in recent years - 2022 saw another record-breaking proxy season, with over 800 ESG-related proposals submitted by shareholders at Russell 3000 companies. STOCKHOLM, Sweden, March 15, 2023 /PRNewswire/ -- On March 15, 2023, Ericsson (NASDAQ:ERIC) filed its Annual Report on Form 20-F for the year ended December 31, 2022, with . In addition, ethical business practices did not make the top seven last year, but was number five in 2020. Of the 96 filings that included environmental disclosure in 2022: Although the number of proxy statements that contained environmental disclosure has remained fairly constant, environmental disclosures in Form 10-Ks have increased significantly over the past two years. Our survey also found that an increasing number of companies have added some quantitative information to their ESG disclosures in SEC filings, particularlywith respect to certain categories, such as environmental matters and human capital management, and nearly every category saw some increase in quantitative disclosures from 2019.13As noted in our take-aways below, a key question is also where any relevant quantitative ESG information will be provided in a sustainability report or SEC filing. For example: Compensation tied to environmental goals (11 of 19 companies). We bring our culture to life through our core values, which serve as the foundation of our business and the guiding principles behind the decisions we make every day., Importance of Board in Shaping Culture, for example: Our Board and its committees play a key role in establishing and maintaining our culture, setting the tone at the top and holding management accountable for its maintenance of high ethical standards and effective policies and practices to protect our reputation, assets, and business.. We are currently focused on calculating our scope 3 GHG emissions, and in conjunction with our Value Creation Plan, we are assessing energy usage and reduction opportunities and determining decarbonization goals.. Overall, 47 companies included disclosure on board oversight of E&S issues in their 2022 filings. E&S targets and goals, which made the top seven list for the first time since our survey began in 2019. Twenty-one of the 2020 filings surveyed (or 21%), including 19 of the 2020 proxy statements surveyed (or 38%), increased their disclosure related to social impact and community relations, as compared to 2019. Fill out the form to gain access to both a digital and PDF version of the report. For example: Climate Change Could Have a Negative Impact on [the Companys] Results of Operations and Financial Condition. Climate change presents both immediate and long-term risks to [the Company] and [our] customers and clients, with the risks expected to increase over time. These are unprecedented times, and companies are facing important issues as they navigate the current economic, political, and social climate. Overall, 47 companies included disclosure on board oversight of E&S issues in their 2022 filings. Public companies should be assessing ESG matters facing their businesses well in advance of their SEC filings and confirming whether any of these matters present material risks to their businesses that need to be addressed in SEC filings. The regulatory landscape for ESG disclosure by U.S. public companies faces potentially dramatic changes, with the Securities and Exchange Commission ("SEC") proposing rules that would mandate comprehensive climate change disclosures and integrate key aspects of sustainability reporting with annual reports. [11]. The topics on the rise in 2020 included Human Capital Management, Environmental, Corporate Culture,. The social impact and community category of ESG disclosure moved down from second to sixth on our list of increased ESG disclosure. Twenty-five surveyed companies disclosed that they align their sustainability reporting with both Sustainability Accounting Standards Board (SASB) standards and Task Force on Climate-related Financial Disclosures (TCFD) frameworks (compared to 13 in 2021). Of the surveyed companies, 11 (or 22%) disclosed that their Nominating and Corporate Governance Committee primarily oversaw ESG matters, while 25 indicated that ESG matters were overseen by a more specialized committee, such as a dedicated Sustainability Committee or a Public Issues and Contributions Committee. Environmental disclosure, with a focus on climate change, which moved up from third to first in 2022; Human capital management, with a focus on diversity and inclusion; and. (go back), 5For more information, see our alert SEC Issues Sample Comment Letter as it Ramps up Scrutiny of Climate Disclosures.(go back), 6Public company ESG disclosures vary significantly for a variety of reasons, and the disclosure examples included in this article are representative of the subjects covered within each applicable category. With the SEC's new guidance on PvP, companies are scrambling to make adjustments before filing proxy statements. For the first time in White & Cases annual survey, E&S Goals and Targets made the top seven categories, rising to the third spot with the largest increase in disclosure. The SEC has become increasingly focused on environmental, social, and governance (ESG) disclosures, particularly climate change disclosures. 20 Disclosure Topic 9 is available here and Disclosure Topic 9A is available here. Charitable Giving (in 12 of the 21 filings). 11 In 2020, large funds with ESG criteria outperformed the broader market. 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