ESG has become such a large component of my law practice that I am now collaborating with a fabulous group attorneys in ESG Legal Solutions, LLC, a new non-law consulting firm. Nancy Hudes and I will be publishing a new blog beginning later this month at And if we can assist you or a client of your in ESG matters, do not hesitate to reach out to me.

The origin of this idiom comes from the widespread misconception that ostriches bury their heads in the sand. Despite that this incorrect myth is two thousand years old, originating in ancient Rome, hiding from danger with the thought that if you cannot see an attacker they cannot see you, has never proved a good strategy.

Businesses cannot ignore or refuse to think about the environmental, social and governance (ESG) space; it is not going away.

While the idea of ESG began in 2004 with a United Nations initiative to influence capital in non-Western markets, in 2021 the legal and political institutions in the United States and the EU are demanding those ideas be implemented by businesses posthaste.

Additionally, investors and also employees, vendors, suppliers, and a host of other stakeholders are now looking for companies to create and implement sustainable policies and practices that respond to environmental and social matters.  Whereas in the past there might have been a single print story seen by Wall Street Journal subscribers, today, there is viral social media that can attack a company with millions of views in hours if not minutes.

Businesses are being pulled into or have in some cases voluntarily dived into the risk and opportunity that is ESG.

A recent study found only 42% of public companies identified having at least one director with expertise in ESG. Yet companies are under pressure to articulate ESG policies and practices, sometimes on what are controversial matters, while boards of directors and c-suites are struggling to navigate in this new space. This is not surprising given the breadth of the ESG landscape.  Many of the ESG topics don’t lend themselves to mathematical reporting of data (.. something companies are good at). The Wall Street Journal recently asked, is there really a balance (not to say a moral equivalency that should have a single spreadsheet) prioritizing an increased number of women employees versus reducing plastic waste? Significantly, many ESG issues lack any clear tie to financial “materiality” such that they have not in the past risen to the bar of an SEC permitted, not to say mandated, disclosure. Other regulations also prohibit ESG disclosures as recently posted about, Labor Department Will Not Enforce Anti ESG Rule.

Some will remember when this topic was characterized as “corporate social responsibility” issues and was treated separate and apart from the business of earning profits. In 1976 when Milton Friedman received the Nobel Prize in economics, matters of climate change and others that now are under the large umbrella of ESG, were topics that could bear on the public good, but were not relevant to maximizing value for shareholders. But, no more.

As public sentiment has changed, public policy is following. Today boards of directors increasingly have oversight obligations including related to climate and other ESG risks, and disclosures of those risks. Those obligations flow from current interpretations of both the federal securities laws and fiduciary duties of loyalty and care rooted in state law.

Under the federal securities laws, the board plays a critical and mandatory role in the existing corporate disclosure process. This increasingly requires directors to think about and consider the impact of climate change and other ESG matters on the financial statements and other corporate disclosures. For example, we have worked with companies for more than a decade reacting to the SEC’s 2010 climate guidance that identifies disclosure obligations.

And since the passage of Sarbanes Oxley in 2002, boards at public companies directly oversee the audit of financial statements which processes must consider and often disclose environmental and other matters.

This is all happening now. This year’s proxy season saw large numbers of environmental and other ESG matters brought to the floor at public company annual meetings. In a much reported example, 65% of shareholders at the United Airlines annual meeting voting in favor of a resolution seeking more information on how the company’s lobbying aligns with the goals of the Paris Agreement. We have worked with public companies and their counsel for years on responding to these matters, but the level of shareholder activism in 2021 is unprecedented.

As we await new federal statutory and regulatory action promised by the Biden Administration, today we provide legal and non-law solutions not only to mitigate ESG risk but also to work with businesses in order to maximize ESG opportunities.

Today, for many of our clients, reputational risk is real in the realm of sustainability, and so is the opportunity for a company to stay relevant by incorporating ESG into management and governance practices. If the organization wants the very best employees (.. think human capital) and to keep its very best customers and attract new customers (.. current and future revenues), in most business sectors, today, actively participating in the ESG space is of import. And yes, much of our work is preparing clients to thrive in the all but certain and fast approaching more prescriptive ESG regulatory framework.

There is no one right answer for each individual company on how to mitigate risks and maximize opportunities with respect to ESG issues. These are complex, evolving and, in some instances, highly charged issues, but businesses must act.

Business leaders cannot bury their heads in the sand because ESG is big and bold and here to stay.