Category Archives: Diversity, Equity, and Inclusion (DEI)

ESG: Key Trends in 2020 and Expectations for 2021 (Part I of III)

by Marc S. Gerber, Scott C. Hopkins, Simon Toms, Helena J. Derbyshire, Louise Batty, Adam M. Howard, Greg P. Norman, Damian R. Babic, Zoe Q. Cooper Sutton, Kathryn Gamble, Sym Hunt, Caroline S. Kim, Abigail B. Reeves, Patrick Tsitsaros, and Eleanor F. Williams

In a tumultuous year, one of the key clear messages to emerge from 2020 was that environmental, social and governance (ESG) concerns are here to stay. As mentioned in our 31 July 2020 article “ESG in 2020: A Half-Year Review,” although many investors feared that the focus on ESG policies would fall away in the face of an economic crisis, the opposite appears to have occurred. The pandemic instead has triggered a debate on what societies really value, and at the same time exposed the extent of global interconnectedness and the “tragedy of the horizon” whereby societies fail to plan in the longer term and only address issues when it is too late. This focus continued throughout 2020 and, as a result, many now regard the coming months and years as an opportunity to rebuild economies with ESG matters, corporate purpose and sustainability firmly placed at the fore. In this three-part post, we review the key trends that emerged in 2020 and continued to develop in the second half of the year. We then set out our expectations for the trends that will emerge or continue in the ESG sphere over the coming year.

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Nasdaq Proposes New Listing Rules Regarding Board Diversity

by Edward D. Herlihy and David K. Lam

On December 1, 2020, The Nasdaq Stock Market LLC (“Nasdaq”) submitted a proposal (PDF: 1.51 MB) to the SEC to adopt listing rules related to board diversity. There appears to be some confusion in the news media about the concept. The proposed rule does not impose a hard mandate or quota system, as some of its critics have suggested. Instead, the Nasdaq proposal is a disclosure-based rule that offers companies flexibility to maintain their decision-making authority over the board’s composition.
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Protesting Racism: Was It a Moment or a Movement? And What Does This Have to Do with Corporate Compliance?

by Cheryl L. Wade

For several months in 2020, news reports and articles began with a recitation of the names of black men and women killed by police violence. We engaged daily in a national discourse about systemic racism, and many business leaders joined the discussion. No longer reticent on this topic, corporate executives issued statements that pledged a commitment to antiracism work. Companies sent letters to consumers, employees and the general public. All of the statements mentioned injustice, racism or bias. Business leaders seemed to have moved beyond cosmetic rhetorical flourishes that focused solely on diversity, access and inclusion. This was a seismic and potentially powerful shift in corporate discourse relating to race. The promise of elevating the discourse on race was ripe with possibility.

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California Enacts Law Requiring Public Company Boards to Include Members of Underrepresented Communities

by Alan F. Denenberg, Joseph A. Hall, Emily Roberts, Byron B. Rooney, Stephen Salmon, Ning Chiu, Betty Moy Huber, and Sarah Kirk

On September 30, 2020, California Governor Gavin Newsom signed Assembly Bill 979, which will require each NYSE and Nasdaq-listed public company with its principal executive offices in California to have at least one director from an “underrepresented community” on its board by December 31, 2021. On December 31, 2022, the minimum will be:

three directors from underrepresented communities, if the company has nine or more directors,
two directors from underrepresented communities, if the company has between five and eight directors, and
one director from an underrepresented community, if the company has four or fewer directors.

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Beyond Virtue Signaling: Practical Guidance for Effective Board Oversight of Corporate Diversity and Inclusion Commitments

by Saema Somalya

Since the onset of protests that followed the death of George Floyd on May 25, 2020, more than 35 of America’s largest corporations have put out statements condemning institutionalized racism. These statements, either implicitly or explicitly, acknowledge that a portion of the responsibility for addressing this racism lies with corporate America.[1] In the weeks and years ahead, corporate boards will be discussing these statements with their CEOs and much hard work will be required to define the appropriate scope of that responsibility and create accountability around it.

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Corporate Compliance Approach to Racism and Excessive Force Issues in Police Departments

by Emil Moschella and Joseph Murphy

Today there is an urgent call for reform with respect to race relations in policing, especially in the use of force. Proposed solutions range from defunding the police to more discrete ideas that address the use of force, de-escalation techniques, dealing with impaired individuals, providing on the scene expertise to work with the police, the quality of internal investigations, discipline, and preventing dismissed law enforcement officers from working in similar positions anywhere in the country.

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SEC Called Upon to Take Action on Diversity and Inclusion in the Asset Management Industry

by Betty Moy Huber and Alexandra Munson

The SEC’s Asset Management Advisory Committee hosted a meeting on July 16, 2020 to discuss the current state of diversity and inclusion (D&I) in the asset management industry. SEC Chairman Jay Clayton, SEC Commissioner Elad Roisman and Director of the SEC’s Division of Investment Management Dalia Blass opened the meeting. Each expressed an interest in understanding why minority- and women-owned firms make up only approximately 1.3% of the total assets under management in the global asset management industry. They asked what efforts the industry is taking to increase this percentage.

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Actions and Words

by Bart M. Schwartz

The pain we all are witnessing following the killing of George Floyd should make all rethink how we can fight racism and give everyone an equal opportunity. Even if we think we are doing the right things, we must examine if we are and if that is enough. We must redouble our efforts, but we also must talk about the value of life, opportunity and freedom for all people. Speaking out needs to be combined with actions. Actions alone are not enough. Racism in any form must not be tolerated.

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Using ESG Tools to Help Combat Systemic Racism and Injustice

by Adam O. Emmerich, David M. Silk, Sabastian V. Niles, Elina Tetelbaum, and Carmen X. W. Lu

Events of recent weeks and months have starkly illuminated the effects of systemic racism and injustice on Black Americans, including threats to physical safety, psychological trauma and economic disparity. CEOs worldwide and across industries have spoken out, expressing their horror and outrage, as well as their resolve to do more. Companies have announced significant financial commitments; others have referred to actions to be taken, and early movers have begun to announce or amplify business-related initiatives. Institutional investors, asset owners, asset managers, private equity fund limited partners and investor groups have also begun speaking out and considering action with respect to companies in their portfolios. The question for all is how to follow through on the sentiments expressed and drive positive change: what tools are available to address systemic racism and injustice and the threats they pose, and how can those tools be used?

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Request for Submissions on Eradicating Racism in the Corporate Compliance and Enforcement Contexts

We at NYU School of Law’s Program on Corporate Compliance and Enforcement strongly condemn the violence and injustices perpetrated by police and others against countless Black Americans. We join in the movement to combat systemic racism, and seek to create more space for discussion of how to eradicate it in the compliance and enforcement contexts. Toward that end, we are requesting submissions (1,200 to 1,800 words in length) to be published on our blog, Compliance & Enforcement, identifying what corporate officers, corporate boards, or enforcement or regulatory authorities can do to detect and root out racism and discrimination (including in their own ranks). Please send submissions or ideas to julie.copeland@nyu.edu.