Environmental, Social,
and Governance (ESG) – Outside Counsel
Why Hire Outside Counsel?
Environmental, social, and governance (ESG) is a quickly developing and broad reaching field, with new legislation and regulations coming out weekly. Generally, the concept is that businesses are tracked not just on their profits, but on their actions relating to ESG factors. The increase in regulations bring an increase in liability and a higher risk of running afoul of regulators. Corporations are faced with challenges facing their fiduciary duty.
The Securities and Exchange Commission’s forthcoming sustainability reporting standards could not only impact publicly trade companies, but also privately held companies through Scope 3 reporting. U.S. companies that trade with the European Union may be subject to the European Sustainability Reporting Standards (ESRS), either directly or through Scope 3 reporting of EU based companies. As the International Sustainability Standard Board’s (ISSB) global sustainability disclosure standards are adopted by other jurisdictions, U.S. companies may face sustainability reporting requirements under Scope 3 standards.
Other aspects of ESG pose potential legal pitfalls for companies. Diversity, equity, and inclusion (DEI) policies, if not handled properly, could violate state and federal anti-discrimination laws. Marketing choices aimed towards ESG standards could expose a company to a derivative suit for breach of fiduciary duty. Greenwashing could expose a company to regulatory and civil penalties.
ESG is a specialized area of practice. Engaging the right attorney as an outside resource can avoid major legal repercussions in the future.
Our experience with ESG
Jon McGowan has established himself as an expert in the legal development of ESG, both in the United States and in the European Union. His article The Trouble With Tibble: Environmental, Social, and Governance (ESG) and Fiduciary Duty, in which he argued that ESG for the sake of ESG is a breach of fiduciary duty, was published by the University of Chicago Business Law Review. He authored a chapter on ESG in the United Kingdom in the book Impact Investing and Social Enterprise: Global Progress and Challenges, published by ABA Publishing. He authored a journal article on green bonds in the United Kingdom for The Year In Review, The International Law Journal of American Bar Association/ International Law Section. In November 2022, he spoke on ESG and fiduciary duty in the European Union at the International Conference on European Company Law and Corporate Governance in Croatia. In February 2023, he spoke on the impact of ESG to local and state governments at the American Bar Association’s Mid-Year Meeting in New Orleans. As a Fellow at the European Law Institute, he served on the members consultative committee for the project Guidance on Company Capital and Financial Accounting for Corporate Sustainability. He is a contributor for Forbes, providing legal analysis and commentary on ESG legal developments in the United States and the European Union.
Examples Of Services we offer
ESG Report Review
Over the past few years, there has been a standardization in the issuance of ESG annual reports by both publicly traded and private held corporations. These reports, normally drafted by sustainability officers or other non-attorneys, contain information on the priorities of a company. However, the language of the ESG reports can expose a company to potential legal issues. This risk will increase as ESG and sustainability reports become standardized. The McGowan Law Firm can review the ESG report, highlight potential pitfalls, and recommend corrective action.
Policy Review
ESG is driving changes to internal corporate policies relating to sustainability, hiring practices, governance, and other areas. Sometimes these policies, while well intentioned, are in conflict of existing legal standards. The pressures to meet ESG metrics, and the fast moving nature of this field, often results in policies being implemented without the proper legal review. The McGowan Law Firm can assist in reviewing or drafting internal policies involving ESG, DEI, sustainability, and other related areas to avoid potential legal issues.
Governance
Corporate governance is the foundation of a well run company, providing the guidance and processes for long term operations. The rise of ESG directly impacts how governance documents should be drafted, especially as it relates to the fiduciary duty of the board of directors. Push back on ESG at the state level, as well as international legal development relating to greenwashing and supply chain are new factors which must be considered. The McGowan Law Firm works with both publicly traded and privately held businesses to draft corporate governance documents, including articles of incorporation, board by-laws, and policies, which are in individualized to the need of the company.
Greenwashing
Greenwashing occurs when a company overstates their environmentally friendly actions. In other philanthropic areas, this may not be an issue. However, with the rise of state, federal, and international regulations, the exaggeration of sustainability and environmentally friendly actions may open a company to litigation and regulatory penalties. In addition to advising on environmental reporting in ESG reports, The McGowan Law Firm can advise on other outward facing environmental actions to avoid conflicts.
Board and C-Suite Presentations
Jon McGowan is an experienced and compelling speaker, with a wealth of knowledge on ESG and business matters. His understanding of the current legal environment, as well as the future of ESG and environmental law, provides an invaluable perspective to corporate decisions makers as they navigate ESG in their business strategy.
Attorney training
ESG is a fast developing legal field that will eventually impact all companies. It is important for all areas of in-house counsel to have a general understanding of the concept and how it was developed. Jon McGowan has presented at multiple legal conferences globally and is active in the legal development of ESG. He is able to present on the historical and current development of ESG, how it impacts companies, and when attorneys need to get concerned.
Lobbying and government Affairs
Jon McGowan has over 20 years of government affairs experience. that experience, combined with his expert knowledge on ESG, allows him to speak effectively on matters under consideration at the state, federal, and international level.
Expert Testimony
Litigation involving ESG practices, fiduciary duty of directors, and compliance, amongst others, is a quickly emerging area of law. Early cases are currently being brought in Europe, testing new legal theories. Jon McGowan’s understanding of the legal theories, regulations, and development is valuable resource in any litigation. His proficiency in public speaking allows him to speak with the clarity and authority needed for effective expert testimony.