Businesses today face increasing scrutiny of their Environmental, Social, and Governance (ESG) strategies from regulators, investors, consumers, NGOs, and other key stakeholders who want—and often require—a commitment to social and environmental responsibility and sound corporate governance. A robust ESG program provides a competitive advantage for businesses that make it a top priority. While ESG has potential to create new business opportunities, it can also pose legal, reputational, and operational risks.

Covington’s global and multidisciplinary ESG practice advises companies, investors, and other stakeholders on the rapidly evolving developments related to emerging ESG and sustainability issues. Our ESG lawyers and advisors help our clients meet the most complex business, legal, and regulatory challenges in the ESG space.

Capabilities

Environment and Climate Change

With the collaboration of our Public Policy, Environmental, and Energy practices, we are ideally positioned to identify opportunities presented by climate change and to help clients navigate the global web of evolving issues they face, including clean energy and efficient infrastructure requirements.

We help clients drive towards carbon neutrality, including through investments and policy advocacy relating to:

• Carbon capture, utilization, and storage (CCS)
• Low-carbon transportation fuels and sustainable aviation fuel
• Green and blue hydrogen
• Zero-carbon power generation
• Offshore wind
• Electric vehicles (EVs), batteries, and energy storage
• Nature-based climate solutions
• Carbon markets

Our climate change and sustainability work includes:

• Public policy
• Regulatory
• Litigation
• Transactional

With our policy, clean/renewable regulatory, and EU State aid expertise, we assist clients with navigating new opportunities presented by:

• The European Green Deal
• The Paris Agreement
• Strategy on Plastics and Circular Economy
• New Circular Economy Action Plan

Additionally, we advise leading multinational companies on innovative approaches to assessing and reporting on the carbon lifecycle emissions of their products and services, and effectively fulfilling their sustainability commitments. We represent major global financial institutions and entrepreneurs with respect to their participation, and their clients’ participation, in the global carbon markets.

ESG and Sustainability Disclosure, Goal Setting, and Investor Engagement

We advise clients across a wide range of industries regarding their mandatory and voluntary ESG and sustainability disclosures, including:

• Setting, tracking, and validating progress on greenhouse gas emissions, including science-based targets
• Human capital management
• Energy efficiency
• Water use
• Other sustainability goals
• Disclosure controls and procedures

We also advise clients as they engage with investors on these matters, including:

• Preparing for investment stewardship meetings
• Shaping ESG ratings reports
• Managing shareholder proposals

We offer both depth and strength in assisting clients with ESG issues in SEC and sustainability reports, including with respect to disclosure controls and assurance. We regularly engage with the SEC staff on behalf of our clients on interpretive questions, no-action letters, consultations regarding discrete disclosure or transactional issues, and similar issues.

Corporate Governance

Stakeholder capitalism, sustainability, and other ESG considerations are commanding increasing attention in the boardroom. New ESG regulations and expanded shareholder activism also add new challenges to fiduciary duty and other governance concerns.

Lawyers in our market-leading global corporate governance practice are keenly attuned to these matters and routinely advise boards of directors, board committees, individual directors, C-suites, and investor groups on:

• Board and committee oversight of ESG
• Executive compensation linked to ESG goals
• Diversity, Equity, and Inclusion
• Board composition, independence, and succession planning
• Political spending and lobbying
• Human capital management
• Crisis management
• Cybersecurity risk governance
• Climate change disclosures
• Shareholder engagement and activism
• Compliance with evolving stock exchange listing standards and regulations

Business and Human Rights

Companies face rapidly evolving legal and enforcement risk and increasing pressure from consumers, investors, NGOs, and other stakeholders to promote social responsibility and human rights.

Our Business and Human Rights practice's work covers a range of human rights risks in companies’ global operations and value chains, including:

• Upstream risks associated with labor, health and safety, and environmental practices in global supply chains
• Community impact risks associated with extractive, infrastructure, and other projects and operations
• Downstream risks associated with products that are susceptible to misuse by repressive governments.

We advise clients on human rights risks in a number of areas, including transparency and supply chain due diligence, export controls, sanctions, and disputes.

ESG Transactions

We handle a broad range of transactions across the globe that help our clients drive the achievement of their sustainability goals. Our Corporate, Securities, Finance, Project Finance, and M&A practices assist our clients with:

• Expanding the deployment globally of sustainable resources and procurement of renewable energy to meet corporate carbon reduction goals
• Sustainability-linked finance, including structuring and taking advantage of sustainability-linked green loans and bonds and other green finance
• Assessing ESG risks and opportunities in corporate deals, including M&A transactions

Employee Benefits and Executive Compensation

Lawyers in our employee benefits and executive compensation practice advise companies and fiduciaries on how to minimize litigation, regulatory, and tax risks related to ESG issues in employee benefit and executive compensation arrangements. Our team remains at the cutting edge of ESG investment issues including:

• Tailoring communications and marketing materials about ESG issues and commitments to take into account the fiduciary obligations of our clients and their customers
• Advising ERISA plan sponsors and fiduciaries on legal issues when considering ESG factors in investment and proxy voting decisions and when hiring service providers
• Helping clients engage with shareholders on proxy proposals that relate to integrating ESG considerations into compensation and benefit arrangements
• Deploying expertise to analyze evolving state fiduciary standards that are often informed by ERISA and trust law
• Counseling on the ERISA, tax, and corporate governance implications of including ESG goals in executive compensation programs

Environmental Marketing Claims

Since 2010, the Federal Trade Commission (FTC) has brought more than 45 enforcement actions against companies for allegedly false or misleading environmental marketing claims, including “free-of,” “biodegradable,” “natural,” and “organic.”

Led by one of the authors of the U.S. Federal Trade Commission’s Green Guides, our practice has first-hand experience to help companies craft public statements about the sustainability or environmental safety of their products and services, addressing advertising rules and principles involving:

• Guidelines specifically designed to help marketers avoid making deceptive environmental marketing claims
• Labeling rules for particular types of products or claims

Public Policy and Regulatory Law Insight and Advocacy

Covington’s ESG practice combines broad legislative and regulatory strategy experience with a keen understanding of how to effectively advocate to policy makers in Congress and the Biden Administration, and in the European Parliament and EU Member States. With more than 120 former government officials, we have direct experience rooted in previous high-level positions, enabling us to provide businesses with strategic advice on how to work effectively with regulators. We understand the mindset of policy makers and influencers whose decisions can affect our clients’ interests, and know the optimal channels to pursue for key information. We are thought leaders and conveners among business leaders advancing ESG objectives.

Institutional Culture and Diversity, Equity and Inclusion

Our Institutional Culture and Social Responsibility lawyers advise the boards and management of companies on their cultural practices, diversity and inclusion policies, and civil rights. We advise on sensitive investigations and audits addressing a broad range of corporate culture issues.

ESG Litigation

Environmental, social and governance (ESG) lawsuits against corporations have taken on increasing importance in recent years, spawning a variety of creative litigation strategies. We advise clients facing a range of exposures, and in litigation matters involving novel nuisance claims, indemnity disputes, and claims arising from marketing claims and disclosures. We have extensive experience working with clients across industries, including the technology, pharmaceutical, and financial services industries.