In my previous post on a November 7th Society of Corporate Compliance and Ethics (SCCE) panel on ESG through the life cycle of a business, I outlined the shifting landscape of ESG in the wake of recent regulatory and social developments in the U.S. This follow-up provides more detail on the insights shared by my fellow panelists, Eugenia Maria Di Marco and Ahpaly Coradin, who explored ESG in the contexts of startups, international markets, private equity, and M&A. As President-elect Trump continues to name cabinet members and advisors, I and others expect that ESG issues will continue to be a hot button issue here in the US.

Ahpaly shared his perspective on ESG trends, particularly in private equity. Although he acknowledged that in the US, interest in ESG is waning, many PE firms still screen for ESG risks at the initial target selection stage and during due diligence. Larger firms see market positioning and risk mitigation as the main benefits of ESG. However, revenue growth and capital allocation are not primary motivators due to the lack of data. He noted that many limited partners are increasingly deploying capital away from sectors like tobacco, alcohol, and to a lesser

Depending on who you talk to, you get some pretty extreme perspectives on generative AI. In a former life, I used to have oversight of the lobbying and PAC money for a multinational company. As we all know, companies never ask to be regulated. So when an industry begs for regulation, you know something is up. 

Two weeks ago, I presented the keynote speech to the alumni of AESE, Portugal’s oldest business school, on the topic of my research on business, human rights, and technology with a special focus on AI. If you're attending Connecting the Threads in October, you'll hear some of what I discussed.

I may have overprepared, but given the C-Suite audience, that’s better than the alternative. For me that meant spending almost 100 hours  reading books, articles, white papers, and watching videos by data scientists, lawyers, ethicists, government officials, CEOs, and software engineers. 

Because I wanted the audience to really think about their role in our future, I spent quite a bit of time on the doom and gloom scenarios, which the Portuguese press highlighted. I cited the talk by the creators of the Social Dilemma, who warned about the dangers of social

Zhaoyi Li, Visiting Assistant Profoessor of Law at the Univeristy of Pittsburgh School of Law, has published a new article, Judicial Review of DIrectors' Duty of Care: A Comparison Between U.S. & China. Here's the abstract:

Articles 147 and 148 of the Company Law of the People’s Republic of China (“Chinese Company Law”) establish that directors owe a duty of care to their companies. However, both of these provisions fail to explain the role of judicial review in enforcing directors’ duty of care. The duty of care is a well-trodden territory in the United States, where directors’ liability is predicated on specific standards. The current American standard, adopted by many states, requires directors to “discharge their duties with the care that a person in a like position would reasonably believe appropriate under similar circumstances.” However, both the business judgment rule and Delaware General Corporate Law (“DGCL”) Section 102(b)(7) shield directors from responsibility for their actions, which may weaken the impact of the duty of care requirement on directors’ behavior.

To better allocate the responsibility for directors’ violations of the duty of care and promote the corporations’ development, it is essential that Chinese company law establish a unified standard of

If you read the title, you’ll see that I’m only going to ask questions. I have no answers, insights, or predictions until the President-elect announces more cabinet picks. After President Trump won the election in 2016, I posed eleven questions and then gave some preliminary commentary based on his cabinet picks two months later. Here are my initial questions based on what I’m interested in — compliance, corporate governance, human rights, and ESG. I recognize that everyone will have their own list:

  1. How will the Administration view disclosures? Will Dodd-Frank conflict minerals disclosures stay in place, regardless of the effectiveness on reducing violence in the Democratic Republic of Congo? Will the US add mandatory human rights due diligence and disclosures like the EU??
  2. Building on Question 1, will we see more stringent requirements for ESG disclosures? Will the US follow the EU model for financial services firms, which goes into effect in March 2021? With ESG accounting for 1 in 3 dollars of assets under management, will the Biden Administration look at ESG investing more favorably than the Trump DOL? How robust will climate and ESG disclosure get? We already know that disclosure of climate

If you’re sipping some hot chocolate while reading this post or buying your Hanukah or Christmas candy, chances are you’re consuming a product made with cocoa beans harvested by child slaves in Africa. Almost twenty years ago, the eight largest chocolate companies, a US Senator, a Congressman,  the Ambassador to the Ivory Coast, NGOs, and the ILO pledged through the Harkin Engel Protocol to eliminate “the worst forms of” child slavery and forced labor in supply chains. In 2010, after seeing almost no progress, government representatives fom the US, Ghana, and the Ivory Coast released a Framework of Action to support the implementation and to reduce the use of child and forced labor by 70% by 2020. But, the number of child slaves has actually increased.

2020 has come and almost gone and one of the Harkin Engel signatories, Nestle, and another food conglomerate, Cargill, had to defend themselves in front of the Supreme Court this week in a case filed in 2005 by former child slaves. The John Does were allegedly kidnapped in Mali and forced to work on cocoa farms in the Ivory Coast, where they worked 12-14 hours a day in 100-degree weather, spoke a different language

It’s hard to believe that the US will have an election in less than two weeks. Three years ago, a month after President Trump took office, I posted about CEOs commenting on his executive order barring people from certain countries from entering the United States. Some branded the executive order a “Muslim travel ban” and others questioned whether the CEOs should have entered into the political fray at all. Some opined that speaking out on these issues detracted from the CEOs’ mission of maximizing shareholder value. But I saw it as a business decision – – these CEOs, particularly in the tech sector, depended on the skills and expertise of foreign workers.

That was 2017. In 2018, Larry Fink, CEO of BlackRock, told the largest companies in the world that “to prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society…Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the license to operate from key stakeholders.” Fink’s annual letter to CEOs carries weight; BlackRock had almost six trillion dollars in assets under management in 2018, and when

No. You didn't miss Part 1. I wrote about Weinstein clauses last July. Last Wednesday, I spoke with a reporter who had read that blog post.  Acquirors use these #MeToo/Weinstein clauses to require target companies to represent that there have been no allegations of, or settlement related to, sexual misconduct or harassment. I look at these clauses through the lens of a management-side employment lawyer/compliance officer/transactional drafting professor. It’s almost impossible to write these in a way that’s precise enough to provide the assurances that the acquiror wants or needs.

Specifically, the reporter wanted to know whether it was unusual that Chevron had added this clause into its merger documents with Noble Energy. As per the Prospectus:

Since January 1, 2018, to the knowledge of the Company, (i), no allegations of sexual harassment or other sexual misconduct have been made against any employee of the Company with the title of director, vice president or above through the Company’s anonymous employee hotline or any formal human resources communication channels at the Company, and (ii) there are no actions, suits, investigations or proceedings pending or, to the Company’s knowledge, threatened related to any allegations of sexual harassment or other sexual misconduct by any

Have you ever wanted to learn the basics about blockchain? Do you think it's all hype and a passing fad? Whatever your view, take a look at my new article, Beyond Bitcoin: Leveraging Blockchain to Benefit Business and Society, co-authored with Rachel Epstein, counsel at Hedera Hashgraph.  I became interested in blockchain a year ago because I immediately saw potential use cases in supply chain, compliance, and corporate governance. I met Rachel at a Humanitarian Blockchain Summit and although I had already started the article, her practical experience in the field added balance, perspective, and nuance. 

The abstract is below:

Although many people equate blockchain with bitcoin, cryptocurrency, and smart contracts, the technology also has the potential to transform the way companies look at governance and enterprise risk management, and to assist governments and businesses in mitigating human rights impacts. This Article will discuss how state and non-state actors use the technology outside of the realm of cryptocurrency. Part I will provide an overview of blockchain technology. Part II will briefly describe how public and private actors use blockchain today to track food, address land grabs, protect refugee identity rights, combat bribery and corruption, eliminate voter fraud

Yesterday, Prof. Bainbridge annotated my "creed" on corporate governance, and I appreciated his take. In fact, many of his chosen sources would have been mine.

In a later footnote, he noted that he was not sure what I meant by my statement: "I believe that public companies should be able to plan like private companies . . . ." I thought I'd try to explain. 

My intent there was to address my perception that there is a prevailing view that private companies and public companies must be run differently.  Although there are different disclosure laws and other regulations for such entities that can impact operations, I'm speaking here about the relationship between shareholders and directors when I'm referencing how public and private companies plan. 

Public companies generally have far more shareholders than private companies, so the goals and expectations of those shareholders will likely be more diverse than in a private entity. Therefore, a public entity may need to keep multiple constituencies happy in a way many private companies do not.  However, that is still about shareholder wishes, and not the public or private nature of the entity itself.  A private company with twenty shareholders could crate similar

This week, two of my co-bloggers shared some great insights on the revamped American Apparel board of directors.  See Marcia Narine quoted in The Guardian article American Apparel adds its first woman to revamped board of directors; Joan Heminway, American Apparel 1, NFL 0. For those not following the American Apparel saga, the New York Times recently reported:

The founder and chief executive of American Apparel, Dov Charney, was fired this week because an internal investigation found that he had misused company money and had allowed an employee to post naked photographs of a former female employee who had sued him, according to a person with knowledge of the investigation. 

Beyond the public relations problems surrounding Charney’s departure, American Apparel is struggling financially as sales have dropped dramatically. As an initial step in trying start a turnaround, the company announced four new board members, including the company’s first female director, Colleen Birdnow Brown, former chief executive of Fisher Communications. 

When I opened the Guardian article quoting Marcia, I had another article open in the tab next to it from the Washington Post’s On Leadership section: For women and minorities, advocating for diversity has a downside.  That article explained:

In corporate America, diversity is about as controversial as motherhood and apple pie. CEOs love to tout the number of women in their upper ranks. Human resource departments like to trumpet their diversity programs in glossy reports.

But a new study finds that for female and minority executives, being seen as an advocate for diversity could actually have a downside. The researchers behind the study, which will be presented at the Academy of Management’s annual conference in early August, found that women and minorities who were rated by their peers as being good at managing diverse groups or respecting gender or racial differences also tended to get lower performance ratings. That’s because they may be viewed as “selfishly advancing the social standing of their own low-status demographic groups,” the researchers write, a no-no when it comes to rating good managers.

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