On November 15, 2021, the U.K.’s Financial Conduct Authority (FCA) moved to progress the British government’s aim of making the U.K. the world’s “first net zero-aligned financial centre” by publishing Primary Market Bulletin 36 (PMB 36). PMB 36 confirms regulatory progress towards extending climate- and environment-focused transparency requirements to most companies with a standard listing of equity shares. Here, we will examine the background to PMB 36, the changes it considers, and the FCA’s indications as to how these changes will be enforced.
The Office of Climate Change and Health Equity
The Department of Health and Human Services (HHS) recently established the Office of Climate Change and Health Equity (OCCHE), reinforcing the Biden-Harris administration’s strong commitment to mitigating legacy damage from climate change and building resiliency for the future. Established in response to President Biden’s Executive Order in January, the office officially opened on August 1.
On November 3, 2021, the U.S. Securities and Exchange Commission (SEC) issued a Staff Legal Bulletin (SLB 14L) limiting the ability of public companies to exclude from proxy statements shareholder proposals that relate to significant social issues and providing clarification regarding certain procedural requirements applicable to shareholder proposals. SLB 14L rescinds prior SLBs 14I, 14J and 14K and is expected to ease the path for shareholder proposals, notably those related to environmental, social and governance (ESG) matters, to make it into the proxy statement.
On Thursday, November 4, proxy advisory firm Institutional Shareholder Services (ISS) launched an open comment period on 16 proposed policy changes. The request for comment grouped the proposed changes within five general topics: (i) Board Diversity; (ii) Board Accountability – Unequal Voting Rights; (iii) Board and Other Governance Structure Elections; (iv) Climate; and (v) Compensation. Focusing primarily on the impact to the U.S. benchmarks, these general topics are summarized below; however, this blog post focuses on ISS’s updates regarding climate issues.
Akin Gump was pleased to recently host its inaugural global virtual Environmental, Social and Governance (ESG) Summit. ESG leaders and Akin Gump lawyers and advisors shared their perspectives on a wide range of topics at the forefront of ESG—including key developments and risk factors for investors, companies and stakeholders both in the United States and internationally.
The November 15, 2021, deadline is approaching to submit comments to the Treasury Department’s Federal Insurance Office (FIO) on its Request for Information (RFI) seeking input on FIO’s future work concerning the insurance sector and climate-related financial risks. This work will initially cover three “climate-related priorities”: (1) identifying issues or gaps in states’ regulation and supervision of insurers; (2) assessing potential disruptions of insurance coverage in U.S. markets especially vulnerable to climate impacts and (3) enhancing FIO’s engagement on ways the sector can help achieve national climate mitigation and adaptation goals.
Last week, the Division of Corporation Finance (Corp Fin) of the Securities and Exchange Commission (SEC) published an illustrative letter that provides samples of comments, which the SEC may issue to companies regarding their climate-related disclosure or their absence. Corp Fin recently began sending selected companies letters based on the sample, following a review of their compliance with SEC guidance. Given the SEC’s increasing focus on climate change and its potential impact on financial markets, this step was not unexpected.
The United States Securities and Exchange Commission recently approved new listing rules proposed by Nasdaq regarding board diversity and related disclosure obligations. Such new listing rules, which we previously described, will require companies listed on Nasdaq trading platforms to satisfy, subject to certain exceptions, newly established targets for gender and ethnic diversity in their boardrooms, or to explain in their public disclosures why they are unable to meet such targets.