Sustainability-Linked Private Placements

In this post we will be looking at sustainability-linked loan principles and their application to a recent sustainability-linked private placement by Trafigura Funding S.A. (“Trafigura”), a subsidiary of Trafigura Group Pte. Ltd., a market leader in the global commodities industry. Trafigura’s private placement of $203.5 million of Senior Guaranteed Sustainability-Linked Notes is believed to be the largest sustainability-linked financing on record in the US Private Placement market to date. Duane Morris previously represented Trafigura in its 2020 private placement of Senior Guaranteed Notes to institutional investors in the United States.

Industry Principles

The two primary sustainability products in the loan market are green loans and sustainability-linked loans. The Loan Syndications and Trading Association (“LSTA”), Loan Market Association (“LMA”) and Asia Pacific Loan Market Association (“APLMA”) originally established standards for these products (called the “Green Loan Principles” (“GLP”) and “Sustainability Linked Loan Principles” (“SLLP”)) in 2018 and 2019 respectively. On 5 May 2020 the LSTA, LMA and APLMA published guidelines that outline considerations for the market in structuring such transactions, as detailed in our alert here.

The key element of a green loan is that the proceeds are used for “green” purposes. A sustainability-linked loan can be any type of debt financing where a company is economically incentivized to achieve sustainability objectives. Unlike a green loan, the proceeds of a sustainability-linked loan can be used for general corporate purposes. The objectives are measured using sustainability performance targets (“SPTs”) that include key performance indicators (“KPIs”) and other metrics to measure improvement. The SLLP guidelines provide examples of SPTs with categories including energy efficiency, greenhouse gas emissions, renewable energy, water consumption and biodiversity.

The GLP and SLLP guidelines are increasingly being applied more widely than the loan market, with private placement issuers utilizing the guidelines for green or sustainable private placements. These products are not only intended for “green” companies; any company can access the green or sustainability loan market provided the transaction is structured in the right way. This means a broad range of industries can utilize the guidelines in a transaction provided there is an appropriate commitment to green projects or sustainability objectives.

Components of a Sustainability-Linked Private Placement

The SLLP guidelines outline four components of a sustainability-linked transaction that we will illustrate the practical application of with reference to the recent sustainability-linked private placement by Trafigura. These components are:

1. Relationship to the company’s overall sustainability strategy
2. Target Setting
3. Reporting
4. Review

1. Relationship to the Company’s Overall Sustainability Strategy

As sustainability-linked private placements are intended to improve a company’s existing sustainability strategy, there needs to be 1) a sustainability strategy in place and 2) a link between the sustainability strategy and the SPTs the company is seeking to achieve. Trafigura selected three KPIs in relation to its operations: reducing greenhouse gas emissions, developing its renewable energy portfolio and bringing its procurement program in line with international sustainability standards.

The SLLT guidelines also encourage companies to disclose sustainability standards or certifications to which they are seeking to conform. For example, Trafigura outlined its intention for full alignment of the business with the ISO standard 20400:2017, an international standard for sustainable procurement.

2. Target Setting

The SPTs need to be “ambitious and meaningful” to the company’s business. For Trafigura, the KPI for reducing greenhouse gas emissions is the same target as set in the company’s sustainability-linked revolving credit facility that closed earlier this year. This KPI will measure Trafigura’s performance in reducing scope one and two emissions by 30% by 2023 (compared to 2020 levels) as set out in its 2020 Responsibility Report.

The SLLP guidelines suggest SPTs should be determined using internal or external specialists so that they are “fit for purpose” with respect to the company’s business and industry. In order to set the KPI aligning Trafigura’s procurement program with international standards, an independent sustainability verifier, ERM Certification and Verification Services (“ERM CVS”), conducted a gap assessment of Trafigura’s management system framework against the ISO standards.

The SPTs and calculation methodologies are communicated between the company and the investors. Price incentives are linked to the performance of the company in achieving the pre-determined SPTs. These price incentives could be an upwards interest rate adjustment if an SPT is not met, an downward interest rate adjustment if SPTs are met, or a two-way pricing structure utilizing upward and downward interest rate adjustments depending on performance.

The Trafigura sustainability-linked private placement is structured with only an upward interest rate adjustment if an SPT is not met. The interest rate adjustment is structured in this way to work around any potential ERISA Final Rule issue, as a downwards adjustment in interest rate based on meeting the targets could be interpreted as a sacrifice of return on investment for a non-pecuniary goal. Although the Department of Labor has subsequently issued a notice it will not enforce the Final Rule, until further guidance is published an ERISA fiduciary must only consider pecuniary factors when making investments.

3. Reporting

A company will need to report up-to-date data in relation to SPTs. The SLLP guidelines suggest reporting should be on an annual basis at a minimum. Companies and investors may seek external opinions and reports with respect to methodologies and assumptions used in reporting.

In Trafigura, ERM CVS will undertake an assessment of the KPI performance on the relevant assessment date each year. The results will form the basis of the KPI report, produced and verified by ERM CVS which details performance with respect to the SPTs. The report is attached to a compliance certificate signed by Trafigura and delivered to the investors each year, stating whether SPTs have been achieved for that period.

4. Review

The SLLP guidelines suggest external review and verification is to be negotiated on a transaction by transaction basis between the company and the investors. External review is strongly recommended where information regarding SPTs is not publicly available. The SLLP guidelines strongly recommend verification by an auditor, environmental consultant or rating agency. Trafigura engaged ERM CVS to review and report on KPIs and SPT compliance for each relevant period.

Although sustainability-linked products originate in the loan market, particularly among European lenders, interest from issuers and investors in the capital markets is increasing as ESG issues move back up the public agenda as the impact of COVID-19 begins to recede. Moreover, application of the SLLP guidelines allow issuers across a broad range of industries to access capital from investors who are demonstrating growing support for businesses that incorporate sustainability into their business operations. Trafigura’s recent US private placement is an indication that US institutional investors are also supporting issuers committing to sustainability targets.

If you have any questions about this post, please contact Drew D. Salvest, Natalie A. Stewart, Rebecca Green any of the attorneys in our Banking and Finance Industry Group or the attorney in the firm with whom you in regular contact.

New York City’s Local Law 97: Energy Conservation Requirements That Open Opportunities

On April 20, Duane Morris LLP hosted a webinar on New York City’s Local Law 97, featuring:

  • Brad A. Molotsky, Partner, Duane Morris LLP, speaking about the legal and policy landscape;
  • Robert Politzer, President and Founder, GREENSTREETNYC, speaking about turning liability into opportunity with Local Law 97 compliance;
  • Crystal Smith, New York Market Director, Greenworks Lending at Nuveen, speaking about C-PACE financing;
  • Dan Egan, Senior Vice President of Energy and Sustainability, Vornado Realty Trust, speaking about the large New York property owner’s perspective; and
  • David Amerikaner, Special Counsel, Duane Morris LLP, moderating.

Local Law 97 was adopted in 2019 as part of New York City’s Climate Mobilization Act (CMA), a package of legislation designed to reduce greenhouse gas emissions from the City’s buildings by 40% by 2030 and by 80% by 2050, using 2005 as the baseline. The CMA includes bills aimed at encouraging the use of solar panels and green roofs, amending building energy efficiency grades, and authorizing the use of Commercial Property-Assessed Clean Energy (C-PACE) Financing to fund energy efficiency upgrades and building retrofits as well green energy installations.

But the centerpiece of the CMA is Local Law 97, which applies, generally, to buildings over 25,000 square feet in the City, with some exceptions, and establishes carbon emission intensity caps that begin to take effect in 2024 and become more stringent over time. The law will require covered buildings to understand their carbon footprints and to reduce their emissions through several mechanisms, including by implementing efficiency improvements and generating green energy, among others. It is estimated that over 50,000 buildings in New York will fall within the ambit of the CMA (over 60% of the buildings within the City), which results in over 3.15 billion square feet of coverage.

The April 20 webinar produced a lively discussion. Below are some of the takeaways from the discussion:

  • Timing. The CMA was passed in 2018 but in order to give building owners time to game plan, evaluate and then execute on carbon reduction plans, will become operative in 2024 with required reporting starting in May, 2025.
  • Failure to comply will be expensive. A covered building must pay $268 for every metric ton that that its carbon emissions exceed the cap established for its building type, beginning with the first compliance period in 2025. There are also fines for filing false emissions reports and failure to file a report.
  • But compliance can reduce operating expenses and modernize a building at minimal cost. A building energy audit is likely to reveal “low-hanging fruit,” such as efficiency upgrades that can be financed at low cost and can reduce energy operating expenses for the property. In addition, clean energy generation can be incorporated into a building with little or no upfront cost and affordable financing, and on-site generation will improve a building’s bottom line over time.
  • C-PACE financing is helpful to making improvements pencil out. C-PACE financing, authorized in New York and soon to be launched in NYC, allows building energy efficiency upgrades to be financed at low rates and paid back through an additional assessment on the property tax bill over a 20 to 25 year period. Note that the CMA also allows renewable energy credits and other offsets to count towards a building compliance targets.
  • New York’s efforts to decarbonize its electric grid will help. The state’s goal is to create all its electricity from carbon-free sources by 2040. As the renewable energy needed to meet this goal continues to be more readily available, NYC buildings will be powered by electrons that were generated using less and less carbon, easing the path to compliance with Local Law 97 over time.
  • The right thing to do for the planet is increasingly converging with the right thing to do for the bottom line. Vornado Realty Trust, for example, set a goal years ago to decarbonize its buildings by 2030. Vornado is just one of many examples of companies that have continued to embrace sustainability, energy efficiency and carbon reduction as smart business, that just happens to help the rest of society in reducing their tenants’ carbon emissions and helping to fight climate change.

A recording of the conversation is available here.

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. We will continue to track New York’s carbon reduction mandates and are available to advise you and your colleagues on compliance with Local Law 97 and other regulations as they are rolled out.

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

Renewable Energy Legislation: Pathways to 100% Clean Energy

Note: This post was drafted by Ryan J. Stevens and appears on the Duane Morris Government Strategies blog.

Renewable portfolio standards (RPSs) are regulatory mandates to increase the production of energy from renewable sources such as wind, solar, biomass and other alternatives to fossil and nuclear electric generation. States have been actively making changes to their RPSs through renewable energy legislation. Generally, RPSs require that a specified percentage of electricity that utilities sell come from renewable energy sources. A report from 2018 found that roughly half of all renewable electricity generation growth and capacity in the last nearly two decades has been associated with state RPS requirements. Some lawmakers are even looking to reach 100% renewable energy in their states.

Twenty-nine states, along with the District of Columbia, and three territories, have an RPS. According to the NRDC, six states, the District of Columbia, and Puerto Rico are committed by state law to achieving 100% carbon-free electricity by 2050 or sooner, with another ten states having non-binding goals of reaching 100% renewable energy.

Massachusetts
Last year, lawmakers introduced H. 2836, which would transition the Commonwealth to 100% clean, renewable energy by 2045, including the energy consumed for electricity, heating and cooling, transportation, agricultural uses, industrial uses, and all other uses by all residents, institutions, businesses, state and municipal agencies, and other entities operating in Massachusetts. Further, the legislation stated the Commonwealth’s goal to obtain 100% of the electricity consumed by all residents, institutions, businesses, state and municipal agencies, and other entities operating in Massachusetts from renewable energy sources by 2035.

The bill defined “renewable energy” as energy produced from sources meeting the following criteria:

  • virtually pollution-free, producing little to no global warming pollution or health-threatening pollution,
  • inexhaustible, coming from natural sources that are regenerative or unlimited,
  • safe, having minimal impacts on the environment, community safety, and public health, and
  • efficient, wise use of resources.

Massachusetts Governor Charlie Baker issued a formal determination letter last year establishing net-zero greenhouse gas emissions as the Commonwealth’s new legal emissions limit for 2050.

Pennsylvania
Two pieces of legislation are pending introduction in the Pennsylvania legislature to achieve 100% renewable energy. Two cosponsor memos were circulated, one in the House and one in the Senate, which would transition the Commonwealth to 100% renewable energy by 2050. Previous versions of these bills have not made it through the legislature in past sessions.

A previous iteration of these bills called for the energy consumed for electricity, heating and cooling, transportation, agricultural uses, industrial uses, and all other uses by residents, institutions, businesses, state and municipal agencies, and other entities operating in Pennsylvania to reach 100% renewable energy by 2050. That bill also called for 100% of the electricity consumed by residents, institutions, businesses, state and municipal agencies, and other entities in Pennsylvania to come from renewable energy sources by 2035.

Hawaii
Hawaii lawmakers passed House Bill 623 in 2015, updating and extending the state’s clean energy initiative and renewable portfolio standards by setting a goal of 100% renewable energy by 2045. Hawaii was the first state to move towards 100% renewable energy.

The legislation calls for each electric utility company that sells electricity for consumption to establish a renewable portfolio standard of:

 15% of its net electricity sales by December 31, 2015;
30% of its net electricity sales by December 31, 2020;
40% of its net electricity sales by December 31, 2030;
70% of its net electricity sales by December 31, 2040; and
100% of its net electricity sales by December 31, 2045.

The Hawaii legislature passed another bill, House Bill 1509, the same year as House Bill 623. House Bill 1509 called for the University of Hawaii to establish a goal of becoming net-zero concerning energy use by January 1, 2035. The bill resulted in the University of Hawaii becoming the first university in the country to set a 100% renewable energy goal.

Maine
In 2019, Maine lawmakers passed L.D. 1494, which Governor Janet Mills approved. The legislation lays out the state’s renewable energy goals: (1) 80% of retail electricity sales by January 1, 2030, and (2) 100% of retail electricity sales by January 1, 2050. The 80% RPS is up from 40% today.

At the same time, Governor Mills also signed L.D. 1679, establishing the Maine Climate Council to help lead the state’s efforts to reduce greenhouse gas emissions as required under L.D. 1494.

Nevada
In 2019, Nevada lawmakers passed SB 358, setting new goals for the state’s energy standards portfolio. Nevada increased its RPS from 25% by 2025 to 50% by 2030. State law now requires each provider to generate, acquire, or save electricity from portfolio energy systems or efficiency measures that are no less than 50% of the total amount of electricity sold to its retail customers.

Nevada currently has a 50% by 2030 requirement, with a non-binding 100% carbon-free goal by 2050.

Federal Efforts
Currently, renewable fuel standards are set state-by-state, creating a patchwork of regulatory schemes with which utilities must contend. Because of this energy providers, many of which have already set ambitious climate goals, have called for a national standard.

In Congress, Rep. Yvette Clarke (D-N.Y.), a member of the Energy and Commerce Committee, reintroduced her legislation with Rep. Peter Welch (D-Vt.) that would create a national renewable energy and efficiency standard “in the coming weeks.” The bill would require electric utilities to get 55% of their supply from renewables by 2030. It also calls for a 22% decrease in electricity use and a 14% reduction in natural gas use in the next 15 years.

In the White House, President Biden has called for a national clean energy standard. That standard would, over time, increase the amounts of electricity generated from fuels that do not emit the greenhouse gases. In addition to wind and solar, this national standard would include things like hydropower and nuclear. However, it remains the legislative path for such a standard remains unresolved.

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, David Amerikaner, Nanette Heide, Darrick Mix, Michael Schwamm, or the attorney in the firm with whom you are regularly in contact.

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. 

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), Nanette Heide, Darrick Mix, Michael Schwamm, David Amerikaner or the attorney in the firm with whom you are regularly in contact.

ESG – Global ESG funds flow increases to $80.5 B in Q3 of 2020 and $2.5 Trillion in ESG AUM

Per a neat article in Funds Fire last week, Moody’s Investor Services issued a February 2021 report  that showed Global ESG flows increased to $80.5 billion in the third quarter of 2020, up 14% from the previous quarter, with sustainable fund assets under management reaching a new high of $1.23 trillion.

In the third quarter, U.S.-based sustainable equity funds saw net inflows of $3.8 billion, even as overall U.S. equity funds saw net outflows of $118.5 billion, the Moody’s report shows.

Clean energy was the top-performing U.S. equity sector, with a total cumulative return of 185%, followed by consumer discretionary, which returned 48.3% last year. Meanwhile, despite entering 2020 with a low valuation, the energy sector lost 33% last year.

President Biden’s focus on renewable infrastructure, along with key political appointments that are likely to influence investment regulations, are likely to have further impact on ESG investing, according to Moody’s.

Per the report, Invesco, which manages $1.37 trillion and oversees $35 billion in dedicated ESG mandates, has targeted 2023 for full ESG integration. BlackRock aims to increase its $200 billion in sustainable investment assets to $1 trillion by the end of the decade.

Further, according to the report, AllianceBernstein was among the firms that had positive momentum in ESG in 2020. At the end of 2020, the firm’s suite of ESG strategies jumped to $16.5 billion, an increase of 60% over the prior year.

According to Funds Fire, Institutional ESG flows, as tracked by eVestment, increased to $109 billion in 2020 from $27.6 billion in 2018. Institutional ESG assets increased to $2.55 trillion from $1.79 trillion over the same period.

The Triple Bottom Line: While numbers can sometimes be manipulated to make a point, in this instance, the sheer numbers and upwards trajectory speaks for itself.  An increase from $27 Billion to over $109 Billion in 3 years; and an increase in ESG assets from 1.79 Trillion to over $2.55 Trillion is significant no matter how  you chose to view ESG investing.

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), Nanette Heide, Darrick Mix, Michael Schwamm, David Amerikaner or the attorney in the firm with whom you are regularly in contact.

ESG – Calvert tightens its proxy voting standards to require Diversity by Gender and by Color on Boards

In a post earlier today, the President and CEO of Calvert Research and Management, Jon Streur, discussed his view on why Calvert “raised” their standards for proxy voting on board diversity.  Calvert, with over $31 Billion in assets under management, is one of the foremost fund managers who have been utilizing an ESG lens within which to evaluate companies for decades.

Per John, “[a]t Calvert, we have used the power of our proxy vote to hold boards accountable for their attention to diversity for three decades. This year, expectations for corporate diversity are rising, and we are more aware than ever of the value of diverse leadership for long-term corporate performance. For this reason, we are increasing our standards for board diversity.”

As a result of their change in voting standards, Calvert will vote AGAINST the nominating/governance committees of public companies that have fewer than 2 women on the board.

Previously, they voted against the nomination of directors for company boards that lacked representation of women.

They also indicated that for companies in the US, the UK, Australia and Canada, Calvert will also vote AGAINST the nominating/governance committee at public companies that have fewer than 2 people of color on the Board or are less than 40% diverse.

Previously, Calvert’s minimum standard was 1 person of color and a board that was 30% diverse.

Research indicates that diversity is a financially material ESG issue. In research begun in 2019 and continuing currently, Calvert found that in “evaluating the financial materiality of gender diversity factors” that gender diversity factors are associated with improved equity returns for both the U.S. and non-U.S. markets.

Per their data, companies with at least 2 women on the board outperformed when compared to those with fewer women on the board, and U.S. large-cap companies with more than 2 women saw even greater improvement. In the U.S. and certain like markets, similar results were found for ethnically diverse boards.

The Triple Bottom Line: According to Jon and Calvert, “proxy voting is a vital way to hold companies accountable for their commitments to board diversity. This and other tools of structured engagement can help encourage positive change”.

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), Nanette Heide, Darrick Mix, David Amerikaner or the attorney in the firm with whom you are regularly in contact.

Green Infrastructure Stormwater Management Rules Take Effect in New Jersey

Amendments to New Jersey’s Stormwater Management Rules, N.J.A.C. 7:8, requiring the use of “green infrastructure” measures for stormwater management took effect on March 2, 2021.

Green infrastructure encourages the infiltration of stormwater into the ground, promoting natural filtration of pollutants and sediment and thereby reducing discharge impacts on streams, rivers, and other waterways. The new rules make green infrastructure the preferred and predominant method for managing stormwater for all regulated residential and non-residential projects.

Previously, the state’s Stormwater Management Rule had allowed projects to use traditional engineered structures such as pipes and culverts to manage stormwater, although the Department of Environmental Protection (NJDEP) had encouraged property owners and project proponents to make use of green infrastructure through financial and technical assistance. The rule change formalizes the state’s requirement that new projects implement green infrastructure measures, such as rain gardens, bioretention basins, vegetated swales, pervious paving, and green roofs, as part of project planning and design.

NJDEP adopted amendments to the Stormwater Management Rule on March 2, 2020; the amendments allowed a year before the rule took effect to allow projects in the system to proceed under existing rules, and to allow municipalities to adopt revised local ordinances and to train municipal review staff.

Going forward, any application for a residential development in the state will be reviewed under the revised Stormwater Management rules. Any application for a non-residential project will be reviewed for compliance with the local stormwater control ordinance, which is required under a municipality’s Municipal Separate Storm Sewer System (MS4) permit. Under the MS4 permit, the stormwater control ordinance must be at least as stringent as NJDEP’s Stormwater Management rules.

Additionally, any applications submitted to NJDEP under its Flood Hazard Area, Freshwater Wetlands, and Coastal Zone Management programs will be reviewed by NJDEP under the new rules.

By making green infrastructure a requirement in new development, New Jersey is taking decisive action to advance Governor Murphy’s stated commitment to improving the management of the state’s watersheds.  The change will improve the sustainability of the state’s waterways and will reduce the runoff of harmful pollutants and sediments.

Cannabis and Social Justice (the “S” in ESG) in New Jersey

Given NJ Governor Murphy’s signature to legalize adult use recreational cannabis in NJ earlier this week, yesterday, 2-23-21, NJ Attorney General Gurbir S. Grewal announced that he has directed local law enforcement officials to drop all outstanding marijuana cases that were based on the now-legal recreational use of pot, a move that came a day after the NJ decriminalization bill and a regulatory framework for an adult cannabis market were signed into law.

The Administration was negotiating with the NJ Assembly and Senate over various decriminalization efforts, including this one, and had reach a point of agreement. While a compromise, it represents a big step forward in the social justice arena for those charged with previous cannabis related offenses.

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) or the attorney in the firm with whom you are regularly in contact.

If interested in ESG issues, please join us for next months FREE ESG panel where we will focus on the Built Environment – March 24 at 12-1 EST.

 

ESG Series – Monthly Free ESG Discussion with Industry Thought Leaders Kicks Off to over 200!

We are soo excited to report on the first of our monthly ESG (Environmental, Social and Governance) zoom webinars focusing on various and sundry ESG and Sustainability issues and topics.

Scheduled for the 3rd week of each month, these FREE webinars will gather “thought leaders” from around the globe to engage in discussion, answer questions and provide their views on what is going on in the arena, what they are planning and how they are executing.

Today’s session featured thought leaders Sara Neff, SVP of Sustainability at Kilroy Realty Trust, Dr. Chris Pyke, SVP at Arc Sokoru and Uma Pattarkine, VP of ESG at Centre Square and was a tour-de-force regarding defining Sustainability, juxtaposing it with ESG and showing how they are different.

We then ventured into a discussion of what are ESG focused companies and how their “alpha” compares vs. non-ESG companies, identified the lack of transparency in the real estate sector regarding others reporting on ESG and followed this up with sharing various “S” reporting methodologies.

Thereafter, we broke down the differences between GRI, CDP, GRESB, SASB, and the reporting of goals and outcomes. Spent some time on how folks are measuring and reporting ESG outcomes. We wrapped up the discussion focusing on how and why LEED and other third party certification methodologies are critical to showing and measuring success.

Key takeaways:

Sustainability – now becoming more carbon focused especially at the building level; measures social impact; provides a lens within which to view long term value creation and survival capabilities and resource allocation

ESG – more focused on disclosures of material, non public information, a set of practices companies should consider following; metrics to measure sustainability through

ESG Performance – ESG focused companies continue to show demonstrable outperformance metrics; the data is now more readily available and is indeed being measured; ESG centric companies have/continue to rebound faster, better and more efficiently than non-ESG focused companies in the face of the pandemic.

More C-suite, Boards, investors, employees and customers are asking ESG and Sustainability related questions and demanding answers on the ESG front than ever before.

Real Estate is currently ranked dead LAST in terms of disclosure and reporting on ESG, behind even the Energy Sector.

LEED continues to help set an aspirational tone for the sustainability movement and continues to require better results in order to score their certifications (v4 is now the standard) and operates and provides an impartial judge to call “balls and strikes” to show real action in buildings.

More and more public companies are reporting ESG goals and what they are doing, where they are doing it and how they are doing it – i.e., over 80% of the S/P 500 are reporting their ESG metrics.

We will publish a link to the webinar in the near future and all are welcome to listen and comment back and ask questions.

Next months panel will focus on the Built Environment and will be held on March 24 at 12-1 EST.

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) or the attorney in the firm with whom you are regularly in contact.