Bocconi July Corporate Governance Workshop: ESG Information and Compliance

Last month I had the privilege of presenting some of my current work at Bocconi University in Milan, Italy.  The promotional poster for the event is included below. All of the workshop presentations (present company excepted) were engaging.

I presented on part of an ongoing research project--a series of papers on environmental, social, and governance (ESG) information.  The first two papers on the series, The Materiality of ESG Information: Why It May MatterT, 84 LSU L. Rev. 1365 (2024), and ESG and Insider Trading: Legal and Practical Considerations, 26 U. Penn. J. Bus. L. __ (forthcoming 2024), address the significance of ESG information under the U.S. federal securities laws and the potential and actual involvement of ESG information in insider trading.  In Milan, I shared my ideas and preliminary research for a third paper currently titled Corporate Information Compliance in an ESG World.  I expect to turn to work on this paper in earnest in the coming months.  I will briefly lay out my current thoughts here in the hope that you may have some feedback.

ESG information plays a role in many business operational settings that are invoked in legal compliance and addressed in compliance policies and programs.  These include:

• Obligations to disclose and report information;
• Protection of intellectual property protection;
• Information exchanges with competitors;
• Execution of a significant transaction;
• Clearance of a barrier to an operational action or anticipated transaction;
• Default under or breach of an important contract;
• Pending changes in mission-sensitive business structures, policies, or programs; and
• Imminent judicial, executive, legislative, or regulatory action.

ESG information is likely to impact legal risk in some of these areas of business operations.  The potential and actual effects of ESG information on legal risk raise questions about the adequacy of current business compliance regimes.

My work in this area is designed to meet a number of objectives, including confirming the connection between ESG information and legal risk, identifying related compliance review practices, offering preliminary suggestions about ESG information’s potential impacts, and proposing specific solutions.  My focus will be on securities regulation compliance, but I hope to make points that are more broadly applicable to business firm compliance practices.  Overall, I desire to use this research to create a heightened awareness of the potential legal significance of ESG information, catalyze specific ESG-related firm (and governmental) compliance activity, provide processes for engaging related compliance program review and revision, and offer substantive compliance guidance.  The ultimate core audiences for this work include compliance lawyers (in-house and outside counsel), compliance business professionals, firm management as a whole, plaintiff and defense bar litigators, and the judiciary.

Let me know what you think of this general idea--using ESG information as a leverage point for the inspection, reflection, and revision of business compliance policies and programs.  Please also respond to any of the rest of the content of this post that either resonates with you or raises questions or concerns.  And if you would like to see the current draft of the forthcoming paper, please let me know.  I am happy to send it to you.