Sustainability Toolkit:
What GCs
Need to Know
Investor and corporate focus on sustainable business practices has always been an important factor in driving long-term shareholder value. That has not changed. But the scope, demands, and attention placed on board and management accountability are evolving at a rapid pace, affecting many corporate constituencies and purposes, and delivering a host of new legal, governance, risk management, regulatory, and business issues for general counsels to master.
We cannot in brief answer every question that might arise as corporate counsel grapple with the myriad elements of corporate sustainability. The range of questions and right answers for companies are wide and often nuanced—one size does not fit all.
But Covington’s multidisciplinary sustainability team has provided an entry point for analysis, understanding, and tailored advice on this wide ranging topic. We will be adding to this toolkit in the coming weeks. If you have any questions or issues you would like to see addressed here or privately, please reach out.
Explore the Topics
Defining Sustainability
Public Policy:
Climate Change
Public Policy:
COVID-19
Public Policy:
Environmental Justice
Public Policy:
UN Sustainable Development Goals
Engaging and Advising Boards of Directors
Investor Expectations
Corporate
Disclosure:
The Basics
Corporate
Disclosure:
Standards and Initiatives
Setting
Corporate Goals
M&A and JV Transactions
Green
Bonds and Sustainability-Linked
Loans
Carbon Markets
Marketing
Claims
Crisis Management
Insurance Implications
Sustainability NGOs
Next: Engaging and Advising Boards of Directors
Key Considerations:
How does environmental justice (EJ) affect my work?
What are some of the key risks to companies arising from the EJ movement?
How can I consider EJ when siting new projects?
What opportunities exist to engage with EJ issues in which my company already operates? What about elsewhere in my company’s value chain?
Another public policy driver for corporate sustainability efforts is the growing global movement for greater environmental justice. This movement acknowledges that communities of color and socio-economically disadvantaged areas in the developed world and large portions of developing countries have suffered disproportionate environmental harm to benefit wealthier economies in the developed world.
To further understand the impact of environmental justice on companies and the communities in which they operate, read more.
Environmental Justice
Public Policy:
COVID-19 may very well change the lens through which we view sustainability for many years to come—by serving as an inflection point for corporate sustainability efforts and broader efforts to combat climate change and address systemic inequalities that have made some populations particularly susceptible to disease. The pandemic has made companies acutely aware of the risks to their businesses from disruptions to global supply chains. And, it has us all taking a closer look at how we live our lives, where our food comes from, whether it is safe, and whether we really need to spend hundreds of hours commuting to work each year.
To further understand the impact of COVID-19 on sustainability efforts, read more.
COVID-19
Public Policy:
Key Considerations:
How is climate change already impacting businesses?
What are some of the key climate risks companies need to be aware of?
What opportunities are there for companies to be part of the solution?
Global warming. Climate change. Weather events. However one characterizes them, the challenges of our time pose a growing threat to corporate performance and sustainability efforts. The risks are increasingly evident. But with crisis also comes opportunity—for learning, pivoting, and mitigating risks to be more climate friendly and resilient.
To further understand climate change as an accelerant of risks and opportunities, read more.
Climate Change
Public Policy:
Key Considerations:
What is sustainability?
Why is it important?
Today’s corporate lexicon around sustainability is jammed with jargon and acronyms. They include: corporate social responsibility (CSR); environmental, social, and governance issues (ESG); Triple Bottom Line - People, Planet, Profits (TBL); sustainable development goals (SDGs); human capital management (HCM); and socially responsible investing (SRI).
For purposes of this toolkit, we define corporate sustainability as a paradigm of corporate management that balances the needs of the present without compromising needs of the future in order to fulfill a corporate purpose of producing and distributing enduring value for all corporate stakeholders.
To further understand this paradigm and why it is important, read more.
Defining
Sustainability
Next: Public Policy: UN SDGs
Next: Public Policy: Environmental Justice
Next: Public Policy: COVID-19
Next: Public Policy: Climate Change
Next: Investor Expectations
Key Considerations:
How does sustainability implicate fiduciary duties?
How should a board approach its oversight of corporate sustainability?
With increased investor expectations for board oversight of sustainability, many boards are asking, “what should we be doing?” For some boards, this is an inquiry in the first instance, while for most boards the question is, “what more should we be doing?” In either case, this presents an opportunity for general counsels and corporate secretaries/chief governance officers to help their boards engage effectively on these topics.
To further understand the tools and frameworks available for board engagement, read more.
Engaging and Advising Boards of Directors
How should the board formalize its process for oversight?
Next: Corporate Disclosure: The Basics
Key Considerations:
How are large public equity funds driving corporate engagement and risk assessment?
Who are ‘activist investors’ and how are they impacting sustainable business strategies?
What are the foundational principles that shape our understanding of sustainable investment?
Investor expectations are a key driver of corporate sustainability initiatives. It is important to understand how large public equity funds and activist investors influence corporate engagement in this area and shape future trends.
To further understand investors’ expectations surrounding sustainability, read more.
Investor Expectations
What are the trends to watch?
Next: Corporate Disclosure: Standards and Initiatives
Key Considerations:
What is a sustainability report?
What is the goal of sustainability reporting?
What does a sustainability report typically include?
Understanding the foundational principles that guide corporate sustainability disclosures is critical to effective oversight of the reporting process. Securities lawyers should be consulted early and often in the drafting process to review disclosures for accuracy, puffery, and appropriate scope.
To further understand the basics of corporate sustainability disclosure, read more.
The Basics
Corporate Disclosure:
When is a sustainability issue considered “material”?
What liability concerns should I be aware of?
Next: Setting Corporate Goals
Key Considerations:
What principles and standards are in place for disclosure?
What do I need to know about reporting greenhouse gas emissions?
Companies are best served by aligning sustainability disclosures with their broader corporate strategy.
Several nonprofit organizations have established voluntary disclosure regimes for sustainability metrics aimed at helping investors, lenders, insurers, and other stakeholders understand the impacts of their actions on financial and non-financial metrics, including greenhouse gas emissions.
To further understand the standards and initiatives related to corporate sustainability disclosure, read more.
Standards and Initiatives
Corporate Disclosure:
Next: M&A and JV Transactions
Key Considerations:
How are SMART Goals applied to corporate sustainability?
How has sustainability goalsetting evolved?
How has peer competition influenced goalsetting?
At the core of any goal worth integrating into a company’s business strategy is the opportunity to enhance or create value. Companies are using sustainability goals to enhance or create value in three areas of importance for corporate strategy: (1) risk management, (2) returns on capital, and (3) growth. In addition, the pioneering sustainable goalsetting of various companies has often been precedent-setting within their respective industries, driving their peers to attempt to follow suit. To that end, consultants and ESG experts have developed model frameworks for companies to utilize in determining the goals and strategy most appropriate for their respective businesses.
To further understand how corporate sustainability goals are set, read more.
Setting
Corporate Goals
What can we learn from successes and failures in goalsetting?
How can companies establish sustainability goals that are “material”?
Next: Green Bonds and SLLs
Key Considerations:
What is the purpose of conducting sustainability or ESG due diligence?
What are the key steps in due diligence of a target in M&A transactions?
What are some of the principal areas of ESG due diligence focus?
How does ESG due diligence for joint ventures differ?
Conducting environmental, social, and governance due diligence in the context of M&A and joint venture transactions is a critical step in the risk assessment process of potential transactions.
To further understand sustainability risks in the due diligence process, read more.
M&A and JV Transactions
Next: Carbon Markets
Key Considerations:
What are Green Bonds and what are they used for?
What are the Green Bond Principles (GBP)?
What are the different types of Green Bonds?
What are Sustainability-Linked Loans and how do they work?
Green Bonds and Sustainability-Linked Loans (SLLs) are two important financing tools for companies interested in pursuing sustainability initiatives or leveraging favorable sustainability performance.
To further understand what they are and how they work, read more.
Green Bonds and Sustainability-Linked Loans
What are the Sustainability-Linked Loan Principles (SLLP)?
What is the future for Green Bonds and SLLs?
Next: Marketing Claims
Key Considerations:
What exactly are “carbon markets”?
Why are investors increasingly interested in them?
What are the risks associated with investing in carbon markets?
Putting a price on carbon emissions is viewed by many economists and scientists as an efficient way of reducing emissions and an integral part of efforts to combat climate change. As companies and jurisdictions announce increasingly ambitious goals to reduce emissions to net zero or net negative, carbon markets often feature as a foundation for jurisdictional efforts to mitigate climate change and are also gaining prominence as part of a broader corporate and investor climate and sustainability strategy.
To further understand what carbon markets are and how they work, read more.
Carbon
Markets
Next: Crisis Management
Key Considerations:
How are environmental advertising claims regulated?
What are the main principles in the FTC’s Green Guides?
What are some of the consequences of making deceptive claims?
Are other labeling rules applicable to sustainability claims?
Are companies bound by voluntary standards?
When crafting public statements about the sustainability or environmental safety of their products and services, companies should consider advertising rules and principles, including guidelines specifically designed to help marketers avoid making deceptive environmental marketing claims, and labeling rules for particular types of products or claims.
To further understand sustainability marketing claim regulation and enforcement, read more.
Marketing Claims
Next: Insurance Implications
Key Considerations:
How does unwanted media coverage impact crisis management?
What might trigger costly litigation?
When is the government likely to intervene or take action?
Increasing public attention to climate change, environmental protection, resources scarcity, human rights, and social justice heightens the prospects that companies may face sustainability crises. Proactive companies will take prudent actions to minimize such risks. Those that find themselves in the midst of a sustainability crisis may have to confront potential consequences.
To further understand those consequences, and get a checklist of sustainability crisis risk management considerations, read more.
Crisis Management
Next: Sustainability NGOs
Key Considerations:
What is the impact of the growing frequency of natural disasters?
How are international organizations collaborating to address sustainability in insurance coverage?
How are company policies evolving to address sustainability issues?
The growing frequency of climate-change triggered natural disasters, and the economic losses they bring, has compelled insurance companies, regulators, and NGOs to confront the task of building an insurance industry that is sustainable long-term. As a result, insurance companies around the world are developing and adopting practices and policy modifications on both a collaborative basis with NGOs and at the individual corporate level, with the latter having direct implications for policyholders.
To further understand sustainability risk implications for insurance coverage, read more.
Insurance Implications
Key Considerations:
What sustainability efforts exist in trade associations in which your company is currently a member?
Where can you find cross-industry benchmarking and peer knowledge for your company’s sustainability efforts?
Which NGOs offer meaningful assistance for corporations seeking to transition their businesses to renewable energy?
Whether your company is in the early stages of its sustainability journey or well down the path, participation in one or more sustainability-focused non-governmental organizations (NGOs) can be a cost effective way to enhance your company’s knowledge of best practices and trending issues, elevate sustainability as an element of your company’s brand, and lend your company’s support to collective advocacy for government policies that will facilitate achievement of your company’s sustainability goals. How to choose an NGO and level of engagement will hinge on a variety of factors.
To further understand what those factors are, and what sustainability-focused NGOs are out there, read more.
Corporate Strategies for Sustainable Energy Procurement
What NGOs help with climate policy advocacy?
What NGOs help companies with natural resource conservation?
What are some of the risks to manage when participating with NGOs?
Contact Us
Suzanne Y. Bell
Suzanne Y. Bell
Palo Alto
Kerry Shannon Burke
Kerry Shannon Burke
Washington
Donald J. Ridings Jr.
Donald J. Ridings Jr.
Washington
Gary S. Guzy
Gary S. Guzy
Washington
W. Andrew Jack
W. Andrew Jack
Washington
Laura Kim
Laura Kim
Washington
Agnieszka Klich
Agnieszka Klich
London
Muftiah McCartin
Muftiah McCartin
Washington
Jessica P. O’Connell
Jessica P. O’Connell
Washington
Kevin Poloncarz
Kevin Poloncarz
San Francisco
Ingrid Rechtin
Ingrid Rechtin
San Francisco
Sebastian F.A. Vos
Sebastian F.A. Vos
Brussels
Key Considerations:
What are the 17 UN Sustainable Development Goals (SDGs)?
`
What are the five steps for implementing the SDGs?
What resources exist to help businesses implement the SDGs?
In 2015, the 193 Member States of the United Nations created a 15-year plan to end extreme poverty, fight inequality and injustice, and protect the planet.
As part of its universal call, the world leaders set forth 17 Sustainable Development Goals (SDGs) along with a roadmap on how these goals can be achieved by 2030 to create a better, more equitable world.
The SDGs include: no poverty, zero hunger, good health and well-being, quality education, gender equality, clean water and sanitation, and affordable and clean energy.
To further understand these goals, and how to implement them,
read more.
UN Sustainable Development Goals
Public Policy:
Key Considerations:
What is the impact of
COVID-19 on the drive
towards decarbonization?
What has COVID-19 revealed about the links among public health, the environment, and inequality?
What important lessons for sustainability can businesses draw from COVID-19?
Two-minute read
Eight-minute read
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Two-minute read
Five-minute read
Seven-minute read
Seven-minute read
Seven-minute read
Four-minute read
Seven-minute read
Six-minute read
Six-minute read
Six-minute read
Six-minute read
Seven-minute read
How does environmental justice (EJ) affect my work?
What are some of the key risks to companies arising from the EJ movement?
How can I consider EJ when siting new projects?
How are large public equity funds driving corporate engagement and risk assessment?
Who are ‘activist investors’ and how are they impacting sustainable business strategies?
What are the foundational principles that shape our understanding of sustainable investment?
Does the SEC require sustainability disclosures?
What is a sustainability report?
What is the goal of sustainability reporting?
What does a sustainability report typically include?
How has peer competition influenced goalsetting?
How has sustainability goalsetting evolved?
How are SMART Goals applied to corporate sustainability?
What are some of the principal areas of ESG due diligence focus?
What are the key steps in due diligence of a target in M&A transactions?
What is the purpose of conducting sustainability or ESG due diligence?
What are the different types of Green Bonds?
What are the Green Bond Principles (GBP)?
What are Green Bonds and what are they used for?
What are some of the consequences of making deceptive claims?
What are the main principles in the FTC’s Green Guides?
How are environmental advertising claims regulated?
Which NGOs offer meaningful assistance for corporations seeking to transition their businesses to renewable energy?
Where can you find cross-industry benchmarking and peer knowledge for your company’s sustainability efforts?
What sustainability efforts exist in trade associations in which your company is currently a member?
Corporate Energy Procurement Strategies
Coming Soon
GHG Accounting Risk in Transactions and JVs
ESG Rankings and Ratings
Read more
Read More
Read More
Read More
Read More
Seven-minute read
Read More
Read More
Read More
Five-minute read
Read More
Read More
Read More
Read More
Read More
Read More
Read More
Read More
Read More
Next: Corporate Energy Procurement Strategies
Next: Public Policy: COVID-19
Eight-minute read: Read More
Key Considerations:
Global warming. Climate change. Weather events. However one characterizes them, the challenges of our time pose a growing threat to corporate performance and sustainability efforts. The risks are increasingly evident. But with crisis also comes opportunity—for learning, pivoting, and mitigating risks to be more climate friendly and resilient.
To further understand climate change as an accelerant of risks and opportunities, read more.
Climate Change
Next: Public Policy: Environmental Justice
Eight-minute read: Read More
Key Considerations:
What is the impact of COVID-19 on the drive towards decarbonization?
What has COVID-19 revealed about the links among public health, the environment, and inequality?
What opportunities are there for companies to be part of the solution?
COVID-19 may very well change the lens through which we view sustainability for many years to come—by serving as an inflection point for corporate sustainability efforts and broader efforts to combat climate change and address systemic inequalities that have made some populations particularly susceptible to disease. The pandemic has made companies acutely aware of the risks to their businesses from disruptions to global supply chains. And, it has us all taking a closer look at how we live our lives, where our food comes from, whether it is safe, and whether we really need to spend hundreds of hours commuting to work each year.
To further understand the impact of COVID-19 on sustainability efforts, read more.
COVID-19
Public Policy:
Next: Public Policy: UN SDGs
Key Considerations:
How can I consider EJ when siting new projects?
What are some of the key risks to companies arising from the EJ movement?
How does environmental justice (EJ) affect my work?
Another public policy driver for corporate sustainability efforts is the growing global movement for greater environmental justice. This movement acknowledges that communities of color and socio-economically disadvantaged areas in the developed world and large portions of developing countries have suffered disproportionate environmental harm to benefit wealthier economies in the developed world.
To further understand the impact of environmental justice on companies and the communities in which they operate, read more.
Environmental Justice
Public Policy:
Next: Engaging and Advising Boards of Directors
Two-minute read: Read More
Key Considerations:
What are the five steps for implementing the SDGs?
What are the 17 UN Sustainable Development Goals (SDGs)?
`
In 2015, the 193 Member States of the United Nations created a 15-year plan to end extreme poverty, fight inequality and injustice, and protect the planet.
As part of its universal call, the world leaders set forth 17 Sustainable Development Goals (SDGs) along with a roadmap on how these goals can be achieved by 2030 to create a better, more equitable world.The SDGs include: no poverty, zero hunger, good health and well-being, quality education, gender equality, clean water and sanitation, and affordable and clean energy.
To further understand these goals, and how to implement them, read more.
UN Sustainable Development Goals
Public Policy:
What resources exist to help businesses implement the SDGs?
Key Considerations:
Read More
Five-minute read:
Key Considerations:
Read More
Seven-minute read:
Key Considerations:
Read More
Seven-minute read:
Key Considerations:
Read More
Four-minute read:
Key Considerations:
Read More
Seven-minute read:
Key Considerations:
Read More
Six-minute read:
Key Considerations:
What opportunities exist to engage with EJ issues in which my company already operates? What about elsewhere in my company’s value chain?
Read More
Seven-minute read:
Read More
Six-minute read:
Key Considerations:
Read More
Six-minute read:
Key Considerations:
Read More
Six-minute read:
Key Considerations:
Read More
Seven-minute read:
Key Considerations:
Cándido García Molyneux
Cándido García Molyneux
Brussels
Mosa Mkhize
Mosa Mkhize
Johannesburg
Sinéad Oryszczuk
London
Ursula Owczarkowski
Ursula Owczarkowski
London
Laura Kim
Washington
Next: GHG Accounting Risk in Transactions and JVs Coming Soon
Read More
Seven-minute read
Key Considerations:
How should we approach energy efficiency projects?
What is a green tariff? Can my company take advantage, or advocate for the creation, of green tariffs to serve our facilities?
What are the best “on-site” options for sustainable energy facilities?
Is there a good decision framework to help guide selection of sustainable energy procurement strategies?
Companies seeking to reduce greenhouse gas emissions and/or increase the energy efficiency of their operations have an array of opportunities for direct or indirect sustainable energy procurement – including renewables, fuel cells, co-generation facilities, waste-to-energy facilities, and energy storage. With more than 240 companies joining RE 100 over 450 companies setting Science Based Targets there are many examples of sustainable energy procurement strategies to emulate. How to choose and successfully implement strategies that are most well-suited for your company can be a daunting question.
To further understand sustainable corporate energy procurement strategies, read more.
What is a virtual power purchase agreement and how does it work?
Sustainability NGOs
Read More
Six-minute read:
The growing frequency of climate-change triggered natural disasters, and the economic losses they bring, has compelled insurance companies, regulators, and NGOs to confront the task of building an insurance industry that is sustainable long-term. As a result, insurance companies around the world are developing and adopting practices and policy modifications on both a collaborative basis with NGOs and at the individual corporate level, with the latter having direct implications for policyholders.
To further understand sustainability risk implications for insurance coverage,
read more.
Corporate Strategies for Sustainable Energy Procurement
Next: ESG Ratings and Rankings
Next: GHG Accounting Risk in Transactions and JVs
Read More
Six-minute read
Key Considerations:
How can companies affect their ESG ratings and rankings?
Who uses ESG ratings and for what purposes?
Who are the leading providers of ESG ratings and rankings and how do they differ?
Given the varied landscape of sustainability disclosure frameworks, investors and other stakeholders are increasingly turning to ESG ratings and rankings to simplify their evaluations and comparative assessments of corporate ESG performance. But the landscape of these third-party ratings and ranking services also can be confusing. These circumstances create both risk and opportunity for companies as they seek to shape and communicate their sustainability and ESG messages.
To learn about navigating this landscape, read more.
ESG Ratings and Rankings
Next: GHG Accounting Risk in Transactions and JVs Coming Soon
Read More
Seven-minute read
Key Considerations:
How should we approach energy efficiency projects?
What is a green tariff? Can my company take advantage, or advocate for the creation, of green tariffs to serve our facilities?
What is a virtual power purchase agreement and how does it work?
What are the best “on-site” options for sustainable energy facilities?
Is there a good decision framework to help guide selection of sustainable energy procurement strategies?
Companies seeking to reduce greenhouse gas emissions and/or increase the energy efficiency of their operations have an array of opportunities for direct or indirect sustainable energy procurement – including renewables, fuel cells, co-generation facilities, waste-to-energy facilities, and energy storage. With more than 240 companies joining RE 100 over 450 companies setting Science Based Targets there are many examples of sustainable energy procurement strategies to emulate. How to choose and successfully implement strategies that are most well-suited for your company can be a daunting question.
To further understand sustainable corporate energy procurement strategies, read more.
Corporate Strategies for Sustainable Energy Procurement
Next: ESG Rankings and Ratings
Read More
Seven-minute read
Key Considerations:
How should we approach energy efficiency projects?
What is a green tariff? Can my company take advantage, or advocate for the creation, of green tariffs to serve our facilities?
What is a virtual power purchase agreement and how does it work?
What are the best “on-site” options for sustainable energy facilities?
Is there a good decision framework to help guide selection of sustainable energy procurement strategies?
Companies seeking to reduce greenhouse gas emissions and/or increase the energy efficiency of their operations have an array of opportunities for direct or indirect sustainable energy procurement – including renewables, fuel cells, co-generation facilities, waste-to-energy facilities, and energy storage. With more than 240 companies joining RE 100 over 450 companies setting Science Based Targets there are many examples of sustainable energy procurement strategies to emulate. How to choose and successfully implement strategies that are most well-suited for your company can be a daunting question.
To further understand sustainable corporate energy procurement strategies, read more.
Corporate Strategies for Sustainable Energy Procurement
Next: GHG Accounting Risk in Transactions and JVs
Read More
Six-minute read:
Key Considerations:
How can companies affect their ESG ratings and rankings?
Who uses ESG ratings and for what purposes?
Who are the leading providers of ESG ratings and rankings and how do they differ?
Companies seeking to reduce greenhouse gas emissions and/or increase the energy efficiency of their operations have an array of opportunities for direct or indirect sustainable energy procurement – including renewables, fuel cells, co-generation facilities, waste-to-energy facilities, and energy storage. With more than 240 companies joining RE 100 over 450 companies setting Science Based Targets there are many examples of sustainable energy procurement strategies to emulate. How to choose and successfully implement strategies that are most well-suited for your company can be a daunting question.
To further understand sustainable corporate energy procurement strategies, read more.
ESG Ratings and Rankings
Next: GHG Accounting Risk in Transactions and JVs Coming Soon
Read More
Seven-minute Read
Key Considerations:
How should emissions be addressed in JVs and commercial transactions?
How does a company decide which emissions to report as its own?
What is GHG accounting?
Greenhouse gas (GHG) accounting—identifying all sources and sinks of GHG emissions—is a becoming a fundamental part of corporate sustainability. As the saying goes, you can't manage what you don't measure. And so accounting for an enterprise's total GHG emissions is the first step towards setting reduction targets, identifying emission reduction opportunities, and tracking progress.
To learn about the ground rules for GHG accounting and important considerations companies should consider in allocating responsibility for GHG emissions in joint ventures and commercial transactions, read more.
GHG Accounting Risk in Transactions and JVs
Next: GHG Accounting Risk in Transactions and JVs Coming Soon
Read More
Key Considerations:
Carol Browner
Carol Browner
Washington
Dan Feldman
Dan Feldman
Washington
Sarah Bishop
Sarah Bishop
London
Jayni Hein
Jayni Hein
San Francisco