Brad A. Molotsky – Page 2 – Sustainability, Resiliency and Risk Mitigation

November 26, 2021November 29, 2023 by Brad A. Molotsky

ESG – $1.2 Trillion Hard Infrastructure Bill Becomes Law with Many Positive ESG Features

On November 6, 2021, the House of Representatives passed what has been referred to as the $1.2 Trillion Dollar “hard” infrastructure bill by a vote of 228-206. Thereafter, later in November, President Biden signed this Bill into law.

The Hard Infrastructure bill includes $550 Billion in new spending focusing on the areas of:

> $110 billion toward roads, bridges and other infrastructure upgrades across the country;

> $40 billion is new funding for bridge repair, replacement, and rehabilitation and $17.5 billion is for major projects;

> $73 billion for the country’s electric grid and power structures, including new transmission lines;

> $66 billion for rail services including expanding high-speed rail to new areas;

> $65 billion for broadband access and infrastructure;

> $55 billion for water infrastructure;

> $21 billion in environmental remediation;

> $47 billion for flooding and coastal resiliency as well as “climate resiliency,” including protections against wild fires;

> $39 billion to modernize public transit, which is the largest federal investment in public transit in history;

> $25 billion for airports;

> $17 billion in port infrastructure;

> $11 billion in transportation safety programs;

> $7.5 billion for electric vehicles and EV charging stations and infrastructure;

> $2.5 billion in zero-emission buses;

> $2.5 billion in low-emission buses; and

> $2.5 billion for ferries.

We will continue to focus on the specifics of the various spending packages and will look to report back as details become more visible. Additionally, the CBO has reported back on the Build Back Better second Infrastructure package Reconciliation Bill to enable the bill to likely be voted on when Congress is back in session.

Triple Bottom Line – While it is sometimes easy to be cynical about our collective will power to invest in hard and soft infrastructure projects, in this instance, real dollars are being committed to upgrades that will have broad ranging positive impacts on many communities and lead to job creation for design, build and operating type jobs for these sectors as well as result in positive (or less-negative) effects on our environment.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on Sustainability and ESG planning and initiatives within their own space. We would be happy to discussion your proposed project with you. For more information, or if you have any questions about this post, please contact Brad A. Molotsky, Hari Kumar, or the attorney in the firm with whom you are regularly in contact.

November 22, 2021 by Brad A. Molotsky

ESG – EPA Announces National Recycling Strategy

Earlier this month, the Environmental Protection Agency (EPA) released its National Recycling Strategy. Interestingly, as they have not always been aligned on issues in the past, the American Chemistry Council’s (ACC) Plastics Division issued the following statement …“America’s Plastic Makers® today welcomed EPA’s National Recycling Strategy, which will help the U.S. achieve its goal of recycling 50% of post-use materials by 2030. EPA’s Strategy also recognizes the potential of advanced (chemical) recycling technology to transform plastic recycling rates in the United States. Advanced recycling is critical for achieving a more circular economy for plastics. Since 2017, 65 advanced recycling projects have been announced that have the potential to divert more than 5 million metric tons of waste annually from landfills.”

“There is significant alignment in what America’s Plastic Makers are calling for in our 5 Actions for Sustainable Change and what EPA has laid out in its National Recycling Strategy. This is particularly evident in the Strategy’s support of increasing domestic markets for recycled material, creating national recycling standards to reduce contamination and measure results more effectively, and enhancing recycling infrastructure.

Further to this end, the ACC called on Congress to further help the EPA implement its strategy and achieve its recycling goals by enacting policies such as a national standard requiring plastic packaging to contain 30% recycled plastic by 2030 and an American-designed producer responsibility system to improve recycling access and collection of all materials. While some might view this as enlightened self-interest given the 70% no- recycled plastic, this author prefers to focus on the positive attribute of having a 30% recycled content requirement and the positive progress this will represent on this front.

Per the ACC, “consumers want packaging with more recycled plastics material, more than 400 brands have committed to increasing the amount of recycled material in their packaging, and America’s Plastic Makers have set a goal to have 100% of plastic packaging to be reused, recycled, or recovered in the U.S. by 2040. EPA’s Strategy lays the groundwork to make much of this possible.”

Triple Bottom Line – While it is sometimes easy to be cynical about alliances and partnerships in the ESG and sustainability space, in this instance it is nice to see the alignment of the EPA and the ACC regarding increasing recycled content and setting industry wide standards with the ultimate goal to create a 100% goal for recycled, reused or recovered for particular materials. N

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on Sustainability and ESG planning and initiatives within their own space. We would be happy to discussion your proposed project with you. For more information, or if you have any questions about this post, please contact Brad A. Molotsky, Nanette Heide, Jolie-Anne S. Ansley, David Amerikaner, Seth Cooley, Vijay Bange, Stephen Nichol, or the attorney in the firm with whom you are regularly in contact.

October 30, 2021 by Brad A. Molotsky

ESG – NJ Single Use Plastic Ban becomes effective as of November 4, 2021

Beginning this coming week, on Thursday, November 4th, restaurants, convenience stores and other food-service businesses are required to comply with a new NJ state law that prohibits them from providing customers with single-use plastic drinking straws unless the customer has specifically requested one.

The new restriction does not impact the sale of beverages that are prepackaged with a plastic drinking straw, such as juice boxes, nor does it apply to the sale of boxes of straws in food stores.

Per NJBIZ, the by-request-only restriction on plastic single-use drinking straws applies to all food-service businesses, including restaurants, convenience stores and fast-food establishments.

Additional restrictions, which take effect May 4, 2022, include bans on single-use plastic carryout bags, single-use paper carryout bags at grocery stores of 2,500 square feet or more, and polystyrene foam food-service products.

For additional information, the state has created a new website at www.nj.gov/dep/plastic-ban-law which includes information on who are “regulated entities”, a Frequently Asked Questions page, a list of establishments and how the law impacts them, and more.

Additionally, the NJ Business Action Center has created a clearinghouse at https://business.nj.gov/bags/vendorclearinghouse to aid businesses in identifying vendors and manufacturers who sell reusable carryout bags permitted by the new law.

Triple Bottom Line – New Jersey joins a growing list of cities, counties and other states who are clamping down on single use plastics as a source of pollution which is exacerbating a growing issue within our sea life as plastics find their way to streams, rivers and oceans, break down and are ingested by the fish we often eat.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on Sustainability and ESG planning and initiatives within their own space. We would be happy to discussion your proposed project with you. For more information, or if you have any questions about this post, please contact Brad A. Molotsky, Nanette Heide, Jolie-Anne S. Ansley, David Amerikaner, Seth Cooley, Vijay Bange, Stephen Nichol, or the attorney in the firm with whom you are regularly in contact.

October 15, 2021 by Brad A. Molotsky

#ESG – NJ Utility PSEG announces two new environmental commitments and issues 2021 Sustainability Report

Local utility Public Service Enterprise Group (“PSEG”) announced earlier today, October 15, 2021, that it has joined The Race to Zero and Business Ambition for 1.5°C, two campaigns that use science-based targets to aid the fight against climate change.

The Race to Zero and Business Ambition for 1.5°C campaigns are designed to help mobilize support from businesses, cities, regions and investors for a healthy and resilient zero-carbon economy, in line with global efforts to limit warming to 1.5°C.

PSEG’s also issued its 2021 Sustainability and Climate Report, which updates the company’s achievements and goals for a wide range of topics, including air emissions, energy efficiency, transportation and waste minimization.

PSEG Chairman and CEO Ralph Izzo said “Climate change is one of the preeminent challenges of our time, and PSEG has an obligation to help address climate change and its effect on our environment, our customers and communities around the world.”

Their Report showed PSEG’s generation portfolio emission rates for NOx and SO2 were down year-over-year by 58% and 77%, respectively, reflecting emission rates that are significantly below industry averages.

The Report also provides updates on PSEG’s progress across a range of sustainability categories, including:

Energy efficiency: PSEG’s energy efficiency targets have been updated and remain on track. New Jersey regulators approved $1 billion of energy efficiency spend for the three-year programs, designed to help the state achieve its updated framework for energy efficiency and peak demand reduction programs, setting five-year savings targets of 2% for electric distribution and 0.75% for gas distribution companies. PSEG’s targets are aligned with New Jersey’s Clean Energy Act (2018), which calls for these savings to be achieved by 2023.
Transportation: PSEG aims to reduce fossil fuel use in its own transportation fleet through vehicle electrification, rightsizing the fleet and utilizing renewable fuels. By 2030, PSEG aims to convert its passenger vehicles, such as sedans and SUVs, 60% of medium-duty vehicles and 90% of heavy-duty vehicles to battery electric vehicles, plug-in hybrids or anti-idle jobsite work systems.
Waste minimization: Companywide, waste and recycling programs successfully diverted 95.5% of material from landfills in 2020. The ongoing goal for its utility, PSEG to focus on new waste streams for recycling, which will continue to decrease landfill tonnage. The waste minimization goal for PSEG is to divert in excess of 95% of material from landfills.
Air emissions: PSEG is reducing air and other emissions by updating its operations and transitioning to cleaner sources of energy, and, per their Report, already has one of the lowest emissions rates among investor-owned power producers, according to MJ Bradley’s Benchmarking Air Emissions report, July 2021. As of 2020, PSEG has reduced its greenhouse gas emissions by more than 54% since 2005 through switching to lower-carbon fuels, improving energy efficiency and modernizing its electricity and natural gas networks, among other strategies.
Biodiversity: PSEG is committed to promoting and enhancing biodiversity through natural resource conservation while continuing to operate in a safe and reliable manner. PSEG established the Estuary Enhancement Program in 1994. Protection of natural resources and biodiversity informs their environmental philosophy and the planning process considers the potential impacts on regional biodiversity.
Diversity, equity and inclusion: PSEG has a target of 30% of total applicable spending allocated to diverse suppliers, including minority-, women-, veteran- and LGBTQ+-owned suppliers. During 2020, PSEG had a sixth consecutive record-setting year by buying more than $644 million worth of goods and services from diverse suppliers, a 15% increase over 2019. More than 28% of the company’s purchases were with diverse vendors. And PSEG is helping develop New Jersey’s clean energy workforce through innovative training and development programs, emphasizing low- to moderate-income and underrepresented communities.
Environmental justice: According to the Report, PSEG is developing an environmental justice commitment in support of the many diverse communities it serves across the region and believes such a commitment should convey the importance of centering environmental justice considerations across the organization so that customers — especially those in underrepresented communities — can benefit from the coming changes of a decarbonized future.

Triple Bottom Line – PSEG is one of a growing number of public utilities that have pivoted and started to embrace climate goals and climate change as being critical to their future success. While not all utilities are aligned this way, many are beginning to take real steps to make change in this regard. Much still to do for sure but good, solid, accountable and reportable steps in the sustainability and ESG arenas. Kudos for the effort and the transparency.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on Sustainability and ESG planning and initiatives within their own space. We would be happy to discussion your proposed project with you. For more information, or if you have any questions about this post, please contact Brad A. Molotsky, Nanette Heide, Darrick Mix, Jolie-Anne S. Ansley, David Amerikaner, Christiane Campbell, Sheila Slocum-Hollis, Vijay Bange, Stephen Nichol, or the attorney in the firm with whom you are regularly in contact.

September 28, 2021 by Brad A. Molotsky

ESG: Boston University Joins the Growing List of Universities Divesting from Fossil Fuels

Earlier this week, Boston University’s Board of Trustees announced that they had decided to divest its endowment from fossil fuels.

According to an open letter dated Sept. 23 and posted on the school’s website, President Robert Brown said the board made its decision earlier that week.

As of Sept. 22, the school will no longer commit direct investments in companies that extract fossil fuels. It will also divest from current, direct investments in fossil fuel extractors and will not commit to any new investments in dedicated fossil-fuel focused products in any asset class.

However, the school has private fossil fuel investments that will likely take more than a decade to wind down per reporting from Justin Mitchell.

The release also indicated that the endowment will seek out investment managers that can provide opportunities in renewable energy sources and “fossil-fuel-free products.”

Brown’s letter also stated that only “a very small fraction” of the university’s endowment is invested in “fossil fuel producers and extractors,” rendering the move to divest “economically inconsequential.”

According to Mr. Mitchell, the endowment is valued at more than $3 billion, according to Boston University’s website and it had approximately $2.4 billion at the end of the 2020 fiscal year, according to an annual report from the National Association of College and University Business Officers.

Boston University is the latest prominent university endowment to announce a divestment from fossil fuels, joining the University of California, Brown University, Cornell University, Georgetown University and Harvard University, in committing to this type of divestiture program.

Triple Bottom Line – BU has joined the growing chorus of major institutions that have begun divesting their endowments of fossil fuel investments. While BU’s announcement is not individually overly statistically significant numerically, the number of major higher educational institutions is continuing to grow and gain momentum. As more institutions of higher education join this chorus, it is likely that fossil fuel divestiture will become more than a few one offs and has the potential to become a trend in the ESG space.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on Sustainability and ESG planning and initiatives within their own space. We would be happy to discussion your proposed project with you. For more information, or if you have any questions about this post, please contact Brad A. Molotsky, Nanette Heide, Darrick Mix, Jolie-Anne S. Ansley, David Amerikaner, Edward Cramp, Katherine D. Brody, Vijay Bange, Stephen Nichol, or the attorney in the firm with whom you are regularly in contact.

September 21, 2021 by Brad A. Molotsky

ESG – Wynn Resorts Announces Sustainability Goals with public ESG Reporting – Big Moves!

Earlier this week, on September 21, 2021 Wynn Resorts issued its Environmental, Social and Governance (ESG) Report, which included the Company’s collective pledges and defined goals to decrease emissions and confront the mounting risk of climate change.

According to the report, Wynn Resorts has achieved various ESG and Diversity, Equity and Inclusion (DEI) goals, with strides being made in community outreach and crisis relief efforts, responsible business practices, and human rights.

In the report’s forward, Wynn Resorts CEO Matt Maddox remarked, “…operating in today’s socially and environmentally-fraught world, [the company] is called to a higher standard: to take responsibility, not just for our decisions, but for the all future impacts of those decisions. Impacts we ourselves may not live to see, but will have caused, nonetheless. Decision-making with careful consideration to the impacts 20 or 30 years from now isn’t just essential, it’s an existential imperative. That is what the future demands of us.”

The Wynn Resorts sustainability program, known as Goldleaf, attempts to bring solutions to the wide range of environment and climate challenges that are unique to each resort that Wynn Resorts operates.

Under the direction of CEO Matt Maddox and Chief Sustainability Officer Erik Hansen, the Company has committed to the following Wynn Resorts Corporate Sustainability Goals:

Net-Zero by 2050: To reduce or offset all carbon dioxide (CO2) produced by our operations no later than 2050.

Carbon Dioxide Emissions Peak by 2030: To stop and reverse year-over-year growth of operational carbon dioxide (CO2) emissions by 2030.

50% Renewable Energy Procurement by 2030: To increase Wynn Resorts supply of renewable energy produced or procured to at least 50% of total consumption by 2030.

The above commitments are aligned with the recommendations made by the Intergovernmental Panel on Climate Change (IPCC) for limiting global warming to below 1.5 degrees Celsius, as referenced in the 2015 Paris Climate Accord.

In 2020, Wynn Resorts completed several major projects in renewable energy, waste diversion, and emissions reduction, including:

Wynn Resorts installed 23 Megawatts of solar power capacity in the United States, which offsets 100% of the energy consumed in the 560,000 square-feet of convention space in Las Vegas, and up to 75% of the peak power demands of the entire 10-million-square-foot Las Vegas resort.

Wynn Las Vegas reduced its annual energy consumption by 20% in 2020 relative to 2015 through capital investments in critical energy-reducing technologies and operational efficiencies, most notably the 160-acre Wynn Solar Field and a concerted effort on preventive systems maintenance.

Encore Boston Harbor received 100% of its energy from renewable and green sources of power and, according to the Report, is the first integrated resort in the Unites States with an onsite microgrid balancing solar energy production, combined heat and power co-generation, and battery storage.

Wynn Las Vegas reduced Carbon Dioxide (CO2) emissions by over 80,000 metric tons from 2019 to 2020, achieved by offsetting energy procured from traditional fossil fuel-based generation with renewable and green energy products.

Encore Boston Harbor diverted 100% of waste from the landfill in 2020 during its first full year of operation, utilizing its comprehensive waste management infrastructure of recycling, composting and waste-to-energy conversion to ensure no waste goes to a landfill.

Wynn Resorts CEO Matt Maddox spearheaded the creation of one of the hospitality industry’s first science-based Health & Safety Plan, which Maddox presented during the White House Business Council on Reopening. The plan became the preeminent roadmap to a successful reopening effort, with policies adopted by several other international brands and industries.

Wynn Las Vegas collaborated with University Medical Center (UMC) to open the UMC COVID-19 Vaccination Center, the first vaccination site to be located onsite at a resort, which administered over 50,000 vaccinations to eligible Nevada residents.

Wynn Las Vegas built and opened the Lighthouse Lab COVID-19 testing facility, a 3,000-square-foot facility at the resort staffed by medical professionals from Lighthouse Lab Services who administer up to 7,000 PCR tests per day, helping usher the return of convention business and group events.

Globally, per the Report, Wynn Resorts donated $23 million USD in funds and in-kind donations to charities in 2020, which included $4.75 million in direct COVID-19 relief efforts, almost $1 million in food and meals, and over 2.5 million pieces of personal protective equipment to recipients like the Nevada National Guard and the Macau Government. In addition, Wynn Resorts global workforce volunteered over 34,000 hours of time in 2020.

The Wynn Resorts Human Rights Policy was broadened in 2020 to include specific expectations and core principles for diversity, inclusion, and non-discrimination. In addition, the Wynn Resorts Diversity Council drafted the first Wynn Resorts DEI Policy to codify goals that foster a culture of inclusion, embrace a diverse workforce, and develop vendor partnerships that create a fair and equal economy.

According to the company, extensive training and security procedures were enhanced in 2020 to combat human trafficking and commercial sexual exploitation, including the development of a company-wide training program for trafficking awareness that will be mandatory for all employees.

The Wynn Resorts ESG Report presents information that references select Global Reporting Initiative (GRI) Standards and Sustainability Accounting Board Standards (SASB).

Triple Bottom Line – Wynn’s public announcement of their Sustainability Goals is a big step and will likely put pressure on their competitors to make similar announcements regarding their plans. Time will tell. Care to take a bet on this front?

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on Sustainability and ESG planning and initiatives within their own space. We would be happy to discussion your proposed project with you. For more information, or if you have any questions about this post, please contact Brad A. Molotsky, Nanette Heide, Darrick Mix, Jolie-Anne S. Ansley, David Amerikaner, Adam Berger, Frank DiGiacomo, Vijay Bange, Stephen Nichol, or the attorney in the firm with whom you are regularly in contact.

June 23, 2021June 23, 2021 by Brad A. Molotsky

NYC enacts Racial Equity Reporting for Many Land Use Projects

On June 17, 2021 the New York City Council passed Intro – 1572-B, legislation which requires “racial equity reports” for certain land-use actions. According to Langan and the ordinance, racial equity reports will be standalone, project-specific, publicly-available documents that provide supplemental information for use during the Uniform Land Use Review Procedure (“ULURP”) process.

Starting June 1, 2022, a racial equity report will be required for applications involving all of the following actions:

Adopting citywide zoning text amendments that affect 5 (or more) community districts;
Designating historic districts that affect 4 (or more) city blocks;
Acquiring or disposing of (selling) city-owned land for a project containing at least 50,000 square feet of floor area;
Increasing permitted residential floor area by at least 50,000 square feet;
Increasing permitted non-residential floor area by at least 200,000 square feet;
Decreasing permitted floor area or number of housing units on at least four contiguous city blocks;
Changing the permitted floor area (for any use) in a manufacturing district; and
Changing use regulations in a manufacturing district with a project containing at least 100,000 square feet of floor area.

The New York City Department of City Planning (“DCP”) and Department of Housing Preservation and Development (“HPD”) will have administrative oversight of the racial equity reports and have been charged with aggregating the data and developing detailed guidance for further report preparation.

According to the Real Deal, the measure requires the DCP and the HPD to create a database (called the “equitable development data tool” (“EDD”)) with current and historic information focusing on neighborhood demographics, affordability and displacement risk. The EDD will include a 20 year lookback, disaggregated by race origin, aimed at spotting trends in the data over time.

For residential developments, reporting would include proposed rents or sales prices and the household incomes as well as listing the number of government-regulated affordable units at different income levels.

For nonresidential projects, reporting would include the “projected number of jobs in each sector or occupation, median wage levels of such jobs based on the most recently available quarterly census data on employment and wages or other publicly available data, and the racial and ethnic composition and educational attainment of the workforce for the projected sectors of such jobs.”

It’s easy to provide this information for projects with government regulatory agreements; not so for areawide re-zonings and private applicants, where many outcomes are possible. By acknowledging the “worst” possible outcomes (market-rate housing! non-union jobs!), the reports will tee up the opposition’s demands.

Triple Bottom Line – often California leads policy and mandates on various social issues, in this instance, New York City has taken action and mandated racial equity reporting in various land use developments for new projects on a go forward basis. This action will require the aggregation of critical data in order to make land use decisions which will likely result in a different, more informed decision making process that takes into account racial disparity and equity. A big step in the process and one which many towns and municipalities in the US will look to in their own decision making. Too early to call on overall success of the initiative or what will occur, but in my view, a big important step in enabling more informed decisions, that this commentator believes will be the beginning of a more national move in many cities to similar reporting and requirements.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on Sustainability and ESG planning and initiatives within their own space. We would be happy to discussion your proposed project with you. For more information, or if you have any questions about this post, please contact Brad A. Molotsky, Nanette Heide, Darrick Mix, David Amerikaner, Vijay Bange, Stephen Nichol, or the attorney in the firm with whom you are regularly in contact.

June 13, 2021 by Brad A. Molotsky

ESG: Will Creating C-Suite Pay Linkages with Diversity, Equity and Inclusion Goal Achievement drive behavior change?

Earlier this year we saw some large market movers tie certain of their credit facility metrics to achieving various ESG goals regarding gender and diversity goals. This appears to be gaining some traction as more companies who’s facilities are renewing are seeing some pressure on this front (i.e., cheaper credit/borrowing rates for achievement of ESG goals).

In addition to borrowing rates now starting to bear some correlation to ESG goal achievement, some companies are now tying executive compensation to specific ESG goal achievement as well.

As recently reported by Emily Glazer and Theo Francis in the Wall Street Journal, Starbucks (increase in managerial diversity), McDonald’s (increase in minority and racial minority leadership roles), Nike (increase in racial and gender diversity) have announced actual compensation based targets that will affect CEO and sr. officer pay depending upon specific ESG DEI (diversity, equity and inclusion) goal achievement. While some would argue this is in relation to increased Board, shareholder and stakeholder engagement and pressure on these companies, others would respond that the companies were already moving in the direction of more causal linkage of ESG goals and compensation.

Nike – setting a goal of 45% of global leadership positions to be held by women, up from 40% in 2025; and 30% of US directors to be members of a racial and ethnic minority, up from 27%

McDonald’s – setting a target of 15% of top executive bonuses being tied to human capital measures including improving the number of women and minorities in the company i.e., 45% of international senior directors and higher managers should be women and 35% in the US are to be held by racial and ethnic minorities, up from 37% and 29% according to the reporters.

Looking back at corporate disclosures from 2020, it was reported that 165 companies or 33% of the S&P 500 companies had disclosed using some level of diversity metric in their compensation structure. This 33% is up from 2020 where Glass Lewis reported that 20 companies had specific DEI metrics tied to compensation and up from 2018 where only 10 had any such metrics.

As these metrics continue to evolve, my sense is better and more transparent measurements will emerge and begin to be assured by external audit type companies to confirm and verify goal achievement. How one retains a worker, recruits a worker and how diverse their supply chain is subject to interpretation, and, as such, clarifying what is being measured and by whom will take some work but our sense is this will be clarified in the next 1-3 years.

“There is a growing body of evidence that shows that companies that have diverse teams outperform companies that are not diverse, whether they’re looking at operating performance or financial performance or innovation“, according to Simiso Nzima, head of corporate governance for California Public Employees’ Retirement Systems as identified in the WSJ article.

Triple Bottom Line – Will putting their proverbial money with their disclosure mouths have been drive additional change? I tend to believe that directly incenting behavior with targeted bonus compensation will, and does, drive specific behavioral outcomes. In this case linking specific bonus targets to ESG DEI outcome achievement will create additional focus and precision in the company’s adhering to and achieving these DEI goals. As such, my sense is that as more and more companies adopt these practices, ISS and Glass Lewis will consider if these metrics should be “matter of course” and as such if a company does NOT have it as a compensation metric it will run the risk of being singled out as poor performer.

Thus, one’s ESG diversity and inclusion goals will actually begin to have a direct fiscal impact on a company’s compensation to its senior officers which is highly likely to get additional or continued focus by these senior officers to insure achievement of these goals. As other S&P 500 corporations begin to include DEI metrics as being tied to compensation, this will also put additional pressure on other public and non public companies to begin measuring and then reporting on DEI type outcomes.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on Sustainability and ESG planning and initiatives within their own space. We would be happy to discussion your proposed project with you. For more information, or if you have any questions about this post, please contact Brad A. Molotsky, Nanette Heide, Darrick Mix, David Amerikaner, Vijay Bange, Stephen Nichol, or the attorney in the firm with whom you are regularly in contact.

April 18, 2021April 18, 2021 by Brad A. Molotsky

ESG: Carbon Footprint Labels – Helpful or Green Washing?

Major Fortune 100 and 500 companies and others continue to focus on their ESG efforts in various forms and arenas, including the continued evolution of carbon emissions disclosures on various products.

As noted by Saabira Chaudhuri in her Wall Street Journal column, consumers, investors, Boards and regulators are becoming more and more interested in emission levels in the context of growing concerns over climate change and its impact.

Unilever PLC – intends to introduce carbon footprint details on 70,000 of its products, given that sales of sustainable products are growing faster than their lines of non-sustainable products. They are currently working on obtaining direct information about their carbon footprint for each ingredient supplier that provides products that are used in Unilever products.

Colgate- Palmolive – continues to work with their supply chain providers of various ingredients that are inputting into their products in an effort to avoid allowing estimates of amounts of impact in favor or real numbers. Colgate continues to work on ways to measure and verify their footprint, and to require that their supply chain actually measure and verify these impacts.

Quorn/Monde Nissin Corp – began displaying carbon-dioxide/kilogram on-package carbon footprint details in 2020 for certain of their meatless products.

Oatly AB, Upfield Holdings BV and Just Salad brands have also started listing carbon emissions figures on both their packaging and menus.

Logitech International began listing carbon emissions figures on their computer keyboard products.

Having labelled and provided on line environmental impact numbers for its Garnier hair products already, L’Oréal SA announced it will be adding carbon labels for all of its “rinse off” products, including shampoos, in 2022.

To date, there is no market based, agreed upon, uniform way to report or measure these various GhG impacts but, each of the above mentioned companies, have attempted to outline their methodologies and have given their rationales on how they measure and report – an excellent first step. As others either desire to join them or feel the pressure from consumers, their Board and/or stakeholders to measure and report as well, one can only hope that a quasi uniform methodology for monitoring, measuring and reporting is agreed upon and utilized so that consumers can measure apples to apples rather than apples to oranges or kilograms to pounds.

The Triple Bottom Line: While personally I am a big fan of labeling (whether this be nutrition or calories on a menu or ingredients in a chemical mixture to enable the consumer to review the information and make an informed decision), and, in my view, the growing use of “carbon labeling” represents a good step in the right direction to enable better, more informed consumer choices, I am just not so sure that everyone’s motivation and nomenclature is the same when using phrases like “net-zero”, “carbon emissions” and “greenhouse gas impact”. As such, the reported results will not be comparable as between products, at least not yet. Again, I am very much in favor of solid attempts by various organizations to self report their impacts, I just look forward to the day when everyone is measuring outcome in a similar fashion so that real comparisons by brand and product will be possible, rather than merely smart marketing by some with a lack of a verifiable real methodology for measuring and reporting. As such, I will put “carbon labeling” in the “growing in interest” category, likely to become more and more real and relevant as time and measurement systems are put in place during 2021 and 2022 and, very likely that regulators like the EU, the SEC or trade associations like the SASB continue to push for more required and verifiable disclosure. As such, an area to continue to pay attention to and keep attuned to the market dynamics that continue to push for more and better information.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on Sustainability and ESG planning and initiatives within their own space. We would be happy to discussion your proposed project with you. Contact your Duane Morris attorney for more information.

If you have any questions about this post, please contact Brad A. Molotsky (bamolotsky@duanemorris.com), Christiane Schuman Campbell, Darrick Mix, Dominica Anderson, Nanette Heide, David Amerikaner or the attorney in the firm with whom you are regularly in contact.

April 11, 2021 by Brad A. Molotsky

ESG – Lending Costs Tied to Internal Diversity, Equity and Inclusion Goals – a Coming Trend?

Mid week last week, Dawn Lim reported in the Wall Street Journal that BlackRock Inc. had cut a 5 year, $4.4 Billion dollar deal with its lending consortium that ties its lending costs on its credit facility to BlackRock’s ability to meet certain diversity, equity and inclusion goals (“DEI”).

The deal, as reported, ties its borrowing costs to meeting targets for women in senior leadership and to meeting numeric goals regarding Black and Latino employees within its work force. The stated goals for Black and Latino individuals as a percentage of its workforce are 30% of its workforce by 2024. Their goal on women in senior management is to increase numerics by 3% each year through 2024.

BlackRock also is focused on growing its environmental, social and governance assets under management from $200 Billion currently, to over $1 Trillion (with a “T”) by 2030. The goals noted are focusing on aligning its own practices with that of the companies BlackRock invests in as CEO Larry Fink continues to push the envelope on ESG investing and increasing workforce DEI.

The result of the credit facility loan covenants will seek to more closely align the company’s ESG investing goals with its internal corporate goals and impose costs on its asset managers via higher costs in its revolver by not achieving their stated goals.

The Triple Bottom Line: A bit too early to call this evolution of tying lending costs to internal ESG goals as a trend (vs. a reaction to public scrutiny elsewhere), but in my view, it is a big step and a signals to the broader market that such self imposed costs can be achieved and that BlackRock is willing to take this type of risk, that align its investment decisions with its internal policies. Big and bold steps indeed.

If you have any questions about this post, please contact Brad A. Molotsky (bamolotsky@duanemorris.com), Nanette Heide, Darrick Mix, Michael Schwamm, David Amerikaner or the attorney in the firm with whom you are regularly in contact.