Environmental, Social & Governance

Overview

Approximately $30 trillion of the world’s assets are currently managed to account for environmental, social & governance (ESG)
risks and opportunities.


Note: The above are representative examples and not a complete list.

Institutional investors and operating companies big and small continue to see ESG issues as sources of risk and opportunity to their bottom lines. We are witnessing significant global legal developments, heightened regulatory scrutiny and greater stakeholder sensitivity to ESG issues.

Institutional investors, such as ERISA plans, registered investment companies, endowments, foundations and hedge funds, are under increasing pressure to take ESG factors into account in their investment decision-making, proxy voting and shareholder engagement processes. Investment advisers, broker-dealers, family offices and others are also now addressing ESG risks and opportunities with respect to their own firms in response to greater concern by clients and employees.

Operating companies are also sensitive to ESG. Whether it is pursuing renewable energy projects, managing environmental compliance, evaluating sustainable financing opportunities, shoring up their cybersecurity defenses, or embarking on diversity and inclusion initiatives, ESG is at the forefront for many operating companies across industries.

With ESG having gone mainstream, Stradley’s Environmental, Social & Governance Group offers clients a holistic approach to help them navigate this fluid landscape of legal and regulatory developments, stewardship codes, disclosure frameworks and nongovernmental organization (NGO) codes of conduct. Our four pillars are:

 Our ESG Experience Includes:

  • Advising asset managers and fund boards on ESG-related regulatory implications (e.g., disclosure requirements under federal securities laws) and on fund incorporation of ESG considerations into investment strategy and decisions.
  • Advising asset managers that are ERISA fiduciaries on their legal requirements under ERISA with respect to ESG.
  • Advising operating companies on environmental and energy-related compliance requirements.
  • Reviewing and drafting investment policies for trustees/board committees to invest in socially conscious investments.
  • Assisting energy companies in developing alternative energy projects in order to secure regulatory approvals and buy-in from stakeholders.
  • Advising on financing strategies that incorporate ESG.
  • Assisting real estate and other clients on environmental liabilities under US environmental law.
  • Counseling clients on environmental liability issues in bankruptcy proceedings.
  • Assisting clients to evaluate the feasibility of establishing or investing in opportunity zones.
  • Advising clients on federal tax considerations of renewable energy projects.
  • Advising clients regarding compliance issues related to anti-discrimination laws, including the draft of policies related thereto, as well as assisting clients with diversity training.

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EVENTS

Nicole Kalajian Speaks at FIA Law & Compliance Division Conference
May 4, 2021
Stradley Ronon Attorney Nicole Kalajian served as a panelist during the “CPO / CTA / Investment Adviser Issues” on-demand program at the FIA Law & Compliance Division Conference. The FIA Law & Compliance Division monitors legal and regulatory developments affecting the futures and derivatives industry, assisting FIA in providing information to help relevant regulators and courts make decisions that affect the futures and cleared swaps community. The division discusses issues with U.S. and International regulators and exchanges and prepares comment letters, position papers, and court briefs when appropriate. Learn more about the event here.

Jamie Gershkow Provides the Latest Bond Fund Updates at the Crane Data Bond Fund Symposium
April 5, 2021
Stradley Ronon Partner Jamie Gershkow served as a panelist at the Crane Data Bond Fund Symposium on March 26. Gershkow’s presentation, “Regulatory Update: Latest Bond Fund Issues,” covered updates on money market funds, including potential reforms to the regulation of money market funds; environmental, social and governance (ESG) matters; and the Securities and Exchange Commission’s 2021 examination priorities. Read More about the event here.

George Michael Gerstein Discusses ESG Investing in Retirement Plans on PLANSPONSOR Webinar
March 18
, 2021
George Michael Gerstein, co-chair of Stradley Ronon’s fiduciary governance group and member of the environmental, social and governance (ESG) group, served as a panelist on the PLANSPONSOR webinar, “Considering ESG Factors in Investment Selection,” on March 18. Gerstein’s panel discussed what the DOL’s latest regulations say about the use of ESG investments in retirement plans, how retirement plan sponsors can abide by their fiduciary duties when making investment selections based on ESG factors, and the different ways plan sponsors can include ESG investments in retirement plans. Read more here. 

INSIGHTS

DOL to Revisit Trump ESG-Related Rules
March 16, 2021
On March 10, the U.S. Department of Labor (DOL) announced that until further notice, it will not enforce certain final rules published at the tail-end of the Trump administration. Specifically, the DOL will revisit, and, in the interim, will cease to enforce, the “Financial Factors in Selecting Plan Investments” and “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights” rules which were published in November and December of 2020, respectively. . Read the Client Alert here.

A Framework for the DOL’s New Proxy Voting Rule
January 7, 2021
The U.S. Department of Labor (DOL) has finalized a rulemaking that pertains to proxy voting and the exercise of other shareholder rights with respect to employee benefit plans subject to the U.S. Employee Retirement Income Security Act of 1974, as amended (ERISA). Read the Client Alert here.

Key Considerations: DOL’s New Final Regulation on ERISA’s Investment Duties (ESG-Related or Not)
November 11, 2020
DOL releases final rule that materially affects the investment duties of all ERISA fiduciaries, including those that consider ESG factors. George Michael Gerstein covers the rule and its implications. Read the Client Alert here.

NEWS

Sara Crovitz Joins Women in ETFs Philadelphia to Examine the Current ESG Investing Landscape
June 16, 2021
Stradley Ronon Partner Sara P. Crovitz served as a panelist on the Women in ETFs Philadelphia virtual event, “What You Need To Know About ESG Investing,” on June 16. The panel explored the ESG investing landscape, including current trends, future outlook and innovations across the financial services industry. Crovitz discussed the rise of ETF products around ESG, potential changes to the regulatory framework, different approaches to ESG, including exclusions, best in class, and active engagement with various companies. Read the article here.

Nicole Kalajian Moderates Washington DC Compliance Round Table on ESG Issues in the Financial Services Industry
May 28, 2021
Stradley Ronon Attorney Nicole Kalajian served as a moderator at Washington DC Compliance Round Table on May 27, along with Marina Baranovsky and Deborah Meshulam. The event featured Amanda Olear, acting director of the Market Participants Division and Deputy Director for Registration and Compliance of the Commodity Futures Trading Commission, and Adam S. Aderton, co-chief of the Securities and Exchange Commission’s Enforcement Division’s Asset Management Unit. The panel discussed their perspectives on environmental, social and governance areas of focus for financial services companies. Read more here.

Sara Crovitz and George Michael Gerstein Cover ESG Trends and Regulation with the Mutual Fund Directors Forum
February 26, 2021
Stradley Ronon Sara P. Crovitz and George Michael Gerstein, members of Stradley Ronon’s new environmental, social & governance (ESG) group, served as panelists on the Mutual Fund Directors Forum program, “ESG, Proxy Voting and Engagement – Where DOL and SEC Regulation has Been and Where it May be Going,” on Feb. 25. Crovitz and Gerstein provided updates on the state of current Department of Labor and U.S. Securities and Exchange Commission regulation around ESG and proxy voting/engagement and what may be coming from the regulators under new leadership. Read the article here.

Visit the ESG Group’s Blog for more insights and news.

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