Outten & Golden LLP
Climate Impact & Sustainability Data (2020)
Reporting Period: 2020
Environmental Metrics
ESG Focus Areas
- Environmental
- Social
- Governance
Social Achievements
- Companies in healthcare, medicine, technology, and higher education are taking active steps to attract, promote, and hire diverse talent; hiring dedicated executives for the ESG function; and publishing diversity reports.
- Many major consumer goods and technology corporations are adopting ESG initiatives such as banning salary history data, proactively looking for unexplained salary differentials, improving family leave policies, and implementing internal rules to promote diversity and inclusion.
- Facebook announced a policy requiring at least 33% of lawyers on litigation or deal teams to be female or racially or ethnically diverse.
Governance Achievements
- Increased focus on behavioral and economic accountability in executive agreements, equity plans, and handbooks.
- Lowering of the threshold for “Cause” termination in executive contracts.
- Inclusion of clawbacks and forfeiture of incentive compensation for broader forms of misconduct.
Climate Goals & Targets
Environmental Challenges
- Lack of meaningful regulations in the US regarding socially responsible governance.
- Overly broad definitions of “Cause” in executive contracts leading to potential exploitation of power over employees.
- Balancing the needs of victims of harassment against the rights of the accused.
Mitigation Strategies
- Shareholder activism and pressure for ESG improvements.
- Major institutional investors favoring companies with policies to recoup payments from executives involved in misconduct.
- Corporate governance advisors guiding companies to change pay practices (lowering severance, tying compensation to performance, eliminating single-trigger change in control payments).