Nouvelles diverses | Page 3

Excellente lecture ce matin de ce billet du Harvard Law School Forum on Corporate Governance : « Legal Liability for ESG Disclosures » (de Connor Kuratek, Joseph A. Hall et Betty M. Huber, 3 août 2020). Dans cette publication, vous trouverez non seulement une belle synthèse des référentiels actuels, mais aussi une réflexion sur les conséquences attachées à la mauvaise divulgation d »information.

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3. Legal Liability Considerations

Notwithstanding the SEC’s position that it will not—at this time—mandate additional climate or ESG disclosure, companies must still be mindful of the potential legal risks and litigation costs that may be associated with making these disclosures voluntarily. Although the federal securities laws generally do not require the disclosure of ESG data except in limited instances, potential liability may arise from making ESG-related disclosures that are materially misleading or false. In addition, the anti-fraud provisions of the federal securities laws apply not only to SEC filings, but also extend to less formal communications such as citizenship reports, press releases and websites. Lastly, in addition to potential liability stemming from federal securities laws, potential liability could arise from other statutes and regulations, such as federal and state consumer protection laws.

A. Federal Securities Laws

When they arise, claims relating to a company’s ESG disclosure are generally brought under Section 11 of the Securities Act of 1933, which covers material misstatements and omissions in securities offering documents, and under Section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5, the principal anti-fraud provisions. To date, claims brought under these two provisions have been largely unsuccessful. Cases that have survived the motion to dismiss include statements relating to cybersecurity (which many commentators view as falling under the “S” or “G” of ESG), an oil company’s safety measures, mine safety and internal financial integrity controls found in the company’s sustainability report, website, SEC filings and/or investor presentations.

Interestingly, courts have also found in favor of plaintiffs alleging rule 10b-5 violations for statements made in a company’s code of conduct. Complaints, many of which have been brought in the United States District Court for the Southern District of New York, have included allegations that a company’s code of conduct falsely represented company standards or that public comments made by the company about the code misleadingly publicized the quality of ethical controls. In some circumstances, courts found that statements about or within such codes were more than merely aspirational and did not constitute inactionable puffery, including when viewed in context rather than in isolation. In late March 2020, for example, a company settled a securities class action for $240 million alleging that statements in its code of conduct and code of ethics were false or misleading. The facts of this case were unusual, but it is likely that securities plaintiffs will seek to leverage rulings from the court in that class action to pursue other cases involving code of conducts or ethics. It remains to be seen whether any of these code of conduct case holdings may in the future be extended to apply to cases alleging 10b-5 violations for statements made in a company’s ESG reports.

B. State Consumer Protection Laws

Claims under U.S. state consumer protection laws have been of limited success. Nevertheless, many cases have been appealed which has resulted in additional litigation costs in circumstances where these costs were already significant even when not appealed. Recent claims that were appealed, even if ultimately failed, and which survived the motion to dismiss stage, include claims brought under California’s consumer protection laws alleging that human right commitments on a company website imposed on such company a duty to disclose on its labels that it or its supply chain could be employing child and/or forced labor. Cases have also been dismissed for lack of causal connection between alleged violation and economic injury including a claim under California, Florida and Texas consumer protection statutes alleging that the operator of several theme parks failed to disclose material facts about its treatment of orcas. The case was appealed to the U.S. Court of Appeals for the Ninth Circuit, but was dismissed for failure to show a causal connection between the alleged violation and the plaintiffs’ economic injury.

Overall, successful litigation relating to ESG disclosures is still very much a rare occurrence. However, this does not mean that companies are therefore insulated from litigation risk. Although perhaps not ultimately successful, merely having a claim initiated against a company can have serious reputational damage and may cause a company to incur significant litigation and public relations costs. The next section outlines three key takeaways and related best practices aimed to reduce such risks.

C. Practical Recommendations

Although the above makes clear that ESG litigation to date is often unsuccessful, companies should still be wary of the significant impacts of such litigation. The following outlines some key takeaways and best practices for companies seeking to continue ESG disclosure while simultaneously limiting litigation risk.

Key Takeaway 1: Disclaimers are Critical

As more and more companies publish reports on ESG performance, like disclaimers on forward-looking statements in SEC filings, companies are beginning to include disclaimers in their ESG reports, which disclaimers may or may not provide protection against potential litigation risks. In many cases, the language found in ESG reports will mirror language in SEC filings, though some companies have begun to tailor them specifically to the content of their ESG reports.

From our limited survey of companies across four industries that receive significant pressure to publish such reports—Banking, Chemicals, Oil & Gas and Utilities & Power—the following preliminary conclusions were drawn:

• All companies surveyed across all sectors have some type of “forward-looking statement” disclaimer in their SEC filings; however, these were generic disclaimers that were not tailored to ESG-specific facts and topics or relating to items discussed in their ESG reports.
• Most companies had some sort of disclaimer in their Sustainability Report, although some were lacking one altogether. Very few companies had disclaimers that were tailored to the specific facts and topics discussed in their ESG reports:
  • In the Oil & Gas industry, one company surveyed had a tailored ESG disclaimer in its ESG Report; all others had either the same disclaimer as in SEC filings or a shortened version that was generally very broad.
  • In the Banking industry, two companies lacked disclaimers altogether, but the rest had either their SEC disclaimer or a shortened version.
  • In the Utilities & Power industry, one company had no disclaimer, but the rest had general disclaimers.
  • In the Chemicals industry, three companies had no disclaimer in their reports, but the rest had shortened general disclaimers.
• There seems to be a disconnect between the disclaimers being used in SEC filings and those found in ESG In particular, ESG disclaimers are generally shorter and will often reference more detailed disclaimers found in SEC filings.

Best Practices: When drafting ESG disclaimers, companies should:

• Draft ESG disclaimers carefully. ESG disclaimers should be drafted in a way that explicitly covers ESG data so as to reduce the risk of litigation.
• State that ESG data is non-GAAP. ESG data is usually non-GAAP and non-audited; this should be made clear in any ESG Disclaimer.
• Have consistent disclaimers. Although disclaimers in SEC filings appear to be more detailed, disclaimers across all company documents that reference ESG data should specifically address these issues. As more companies start incorporating ESG into their proxies and other SEC filings, it is important that all language follows through.

Key Takeaway 2: ESG Reporting Can Pose Risks to a Company

This article highlighted the clear risks associated with inattentive ESG disclosure: potential litigation; bad publicity; and significant costs, among other things.

Best Practices: Companies should ensure statements in ESG reports are supported by fact or data and should limit overly aspirational statements. Representations made in ESG Reports may become actionable, so companies should disclose only what is accurate and relevant to the company.

Striking the right balance may be difficult; many companies will under-disclose, while others may over-disclose. Companies should therefore only disclose what is accurate and relevant to the company. The US Chamber of Commerce, in their ESG Reporting Best Practices, suggests things in a similar vein: do not include ESG metrics into SEC filings; only disclose what is useful to the intended audience and ensure that ESG reports are subject to a “rigorous internal review process to ensure accuracy and completeness.”

Key Takeaway 3: ESG Reporting Can Also be Beneficial for Companies

The threat of potential litigation should not dissuade companies from disclosing sustainability frameworks and metrics. Not only are companies facing investor pressure to disclose ESG metrics, but such disclosure may also incentivize companies to improve internal risk management policies, internal and external decisional-making capabilities and may increase legal and protection when there is a duty to disclose. Moreover, as ESG investing becomes increasingly popular, it is important for companies to be aware that robust ESG reporting, which in turn may lead to stronger ESG ratings, can be useful in attracting potential investors.

Best Practices: Companies should try to understand key ESG rating and reporting methodologies and how they match their company profile.

The growing interest in ESG metrics has meant that the number of ESG raters has grown exponentially, making it difficult for many companies to understand how each “rater” calculates a company’s ESG score. Resources such as the Better Alignment Project run by the Corporate Reporting Dialogue, strive to better align corporate reporting requirements and can give companies an idea of how frameworks such as CDP, CDSB, GRI and SASB overlap. By understanding the current ESG market raters and methodologies, companies will be able to better align their ESG disclosures with them. The U.S. Chamber of Commerce report noted above also suggests that companies should “engage with their peers and investors to shape ESG disclosure frameworks and standards that are fit for their purpose.”

À la prochaine…

David Larcker, Bradford Lynch, Brian Tayan et Daniel Taylor publient un texte qui revient sur la transparence des ghrandes entreprises américaines en matière de COVID-19 « The Spread of Covid-19 Disclosure » (29 juin 2020). Un document plein de statistiques et de tendances sur la transparence… vraiment intéressant sachant que l’enjeu de la question n’est pas à négliger.

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The COVID-19 pandemic presents an interesting scenario whereby an unexpected shock to the economic system led to a rapid deterioration in the economic landscape, causing sharp changes in performance relative to expectations just a few months prior. For most companies, the pandemic has been detrimental. For a few, it brought unexpected demand. In many cases, supply chains have been strained, causing ripple effects that extend well beyond any one company.

How do companies respond to such a situation? What choices do they make, and how much transparency do they offer? How does disclosure vary in a setting where the potential impact is so widely uncertain? The COVID-19 pandemic provides a unique setting to examine disclosure choices in a situation of extreme uncertainty that extends across all companies in the public market. This devastating outlier event provides a rare glimpse into disclosure behavior by managers and boards.

Why This Matters

1. The COVID-19 pandemic provides a unique opportunity to examine disclosure practices of companies relative to peers in real time about a somewhat unprecedented shock that impacted practically every publicly listed company in the U.S. We see that decisions varied considerably about whether to make disclosure and, if so, what and how much to say about the pandemic’s impact on operations, finances, and future. What motivates some companies to be forthcoming about what they are experiencing, while others remain silent? Does this reflect different degrees of certitude about how the virus would impact their businesses, or differences in managements’ perception of their “obligations” to be transparent with the public? What does this say about a company’s view of its relation and duty to shareholders?
2. In one example, we saw a consumer beverage company make zero references to COVID-19 in its SEC filings and website, despite the virus plausibly having at least some impact on its business. In another example, we saw a company claim no material changes to its previously reported risk factors when managers almost certainly had relevant information about the virus and the likely impact on sales and operations. What discussion among the senior managers, board members, external auditor, and general counsel leads to a decision to make no disclosures? What should shareholders glean from this decision, particularly in light of peer disclosure?
3. The COVID-19 pandemic represents a so-called “black swan” event that inflicted severe and unexpected damage to wide swaths of the economy. What strategic insights will companies learn from this event? Can boards use these insights to prepare for other possible outlier events, such as climate events, terrorism, cyber-attacks, pandemics, and other emergencies? Should these insights be disclosed to shareholders?

À la prochaine…

Bonjour à toutes et à tous, voici une intéressante tribune parue dans The Globe and Mail : « Why Canada should adopt pay ratio disclosures » (19 avril 2020).

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In particular, securities regulators should make pay ratio disclosures mandatory to improve transparency of executive pay packages at public companies. Pay ratio disclosures reveal the difference in the total remuneration between a company’s top executives and its rank and file workers….

À la prochaine…

Pour M. Ben Aamar et Mme Martinez, il faut que les entreprises doivent dépasser le « greenwashing » pour informer les investisseurs sur la résilience de leur modèle économique aux chocs environnementaux. Je vous invite à lire leur tribune : « Améliorer l’information environnementale des investisseurs doit devenir une priorité «  (Le Monde, 5 juin 2020).

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La pandémie actuelle peut aboutir à une prise de conscience collective et à un renforcement de la lutte contre les causes du dérèglement climatique, ou bien, au contraire, à une mise entre parenthèses des initiatives en ce sens, car l’attention ainsi que toutes les ressources financières seront consacrées à des mesures de relance économique. La cause climatique passerait alors au second plan face à l’urgence, avec, à terme, des conséquences désastreuses.

Le rôle des gouvernants est majeur. Mais pour orienter correctement les flux financiers, publics comme privés, améliorer l’information environnementale des investisseurs doit également devenir une priorité. Le sujet est peu connu du grand public car d’apparence technique. Pourtant, les enjeux sont considérables.

À la prochaine…

Le cabinet Langlois a publié le 9 avril 2020 un intéressant billet intitulé « Entreprises : nouvelles mesures importantes de divulgation publique des actionnaires » qui expose les mesures proposées dans le budget 2020-2021 déposé le 10 mars 2020 à l’Assemblée nationale concernant la lutte contre l’évasion fiscale et l’évitement fiscal, le blanchiment d’argent, le financement d’activités criminelles et la fraude.

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Dans la foulée de la consultation lancée par le gouvernement du Québec à l’automne 2019 pour renforcer la transparence corporative, des mesures sont proposées dans le budget 2020-2021 déposé le 10 mars 2020 à l’Assemblée nationale. Comme nous l’avons rapporté dans notre article du 8 octobre 2019 intitulé Le gouvernement du Québec lance une consultation sur la transparence corporative, la consultation s’ancrait sur trois propositions principales : la divulgation obligatoire au registre des entreprises du Québec (« REQ ») d’informations concernant les bénéficiaires ultimes, la recherche au REQ par nom d’individu et la divulgation des propriétaires ultimes d’immeubles. 

Après avoir recueilli les commentaires du public et des acteurs du milieu corporatif et afin de poursuivre ses efforts d’accentuation de la transparence corporative, le gouvernement du Québec annonce, dans son budget, l’implantation de certains changements au REQ. Ces modifications prennent racine dans les propositions de l’automne dernier et s’articulent autour de deux axes : 

1. Divulgation des informations relatives aux bénéficiaires ultimes : le gouvernement du Québec met en place une obligation, équivalente à celle déjà imposée aux sociétés régies par la Loi canadienne sur les sociétés par actions, pour toutes les entreprises qui exercent des activités au Québec et qui sont immatriculées au REQ en conformité avec les dispositions de la Loi sur la publicité légale des entreprises (RLRQ, chapitre P‑44.1), de déclarer au REQ les informations relatives à leurs bénéficiaires ultimes. Ces informations seront donc publiques et accessibles à toute personne qui consultera le REQ. Le gouvernement définit largement la notion de bénéficiaires ultimes afin d’inclure toute forme de contrôle direct et indirect d’une personne morale. Les bénéficiaires ultimes sont les personnes physiques qui détiennent un « contrôle important » sur une société, entre autres lorsqu’ils détiennent, directement ou indirectement, 25 % des droits de vote ou de la juste valeur marchande des actions d’une société. 

Québec annonce cependant que cette obligation ne sera pas absolue, afin d’éviter certains débordements en matière de respect de la vie privée des bénéficiaires visés. Notons, par exemple, certaines limites en ce qui concerne la divulgation de l’année de naissance des bénéficiaires ultimes ainsi que de leur adresse résidentielle. De plus, le gouvernement souligne que cette nouvelle obligation n’entrera en vigueur qu’un an après la sanction des modifications législatives pertinentes, afin de fournir aux entreprises une période d’adaptation raisonnable.

2. Recherche par nom d’une personne physique au REQ : s’inscrivant dans la lignée d’un mouvement international et national, le gouvernement du Québec confirme que certaines modifications seront apportées au REQ afin de mettre en place un système de recherche par nom d’une personne physique.

Ce type de recherche devrait permettre d’identifier toutes les sociétés auxquelles une personne physique est liée, que ce soit à titre d’administrateur, de dirigeant, d’actionnaire ou de bénéficiaire ultime.

Encore une fois, le respect de la vie privée étant une préoccupation du gouvernement, certaines limites viendront baliser ce type de recherche au REQ. 

Par ailleurs, la recherche par nom ne sera offerte au public qu’un an après la sanction des modifications législatives pertinentes.

Ces changements ne prendront effet que lors de l’entrée en vigueur d’une éventuelle loi devant être adoptée par l’Assemblée nationale afin de mettre en œuvre ces nouvelles mesures. D’ici là, les règles actuelles demeurent applicables. Nous resterons à l’affût des initiatives en ce sens et surveillerons la venue d’un projet de loi qui devrait être déposé dans les prochains mois. Il sera intéressant de voir les éventuels changements qui pourraient être proposés à ces mesures.

Pour rappel, à l’automne 2019, le gouvernement a consulté la population au sujet de trois initiatives découlant de recommandations faites par différents organismes internationaux reconnus.

Ces trois initiatives étaient :

• l’obligation de déclarer au Registraire des entreprises du Québec les informations relatives aux bénéficiaires ultimes;
• de permettre la recherche par nom et par adresse d’une personne physique au registre des entreprises;
• l’obligation pour l’ensemble des propriétaires fonciers de déclarer les informations relatives aux bénéficiaires ultimes.

Pour accéder au document de consultation : ici

À la prochaine…

M. Cornet propose un document très intéressant sur le reporting extra-financier : une synthèse de tous les référentiels avec les grandes caractéristiques de chacun. Un document très utile ! À consulter : « Les principaux référentiels de reporting extrafinancier dans le monde ».

Je copie-colle le billet de blogue…

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En pièce jointe, un tableau de synthèse actualisé sur les principaux référentiels de reporting extrafinancier et référentiels intégrant un volet ou des recommandations sur le reporting extrafinancier.

Réalisé pour les étudiants.es de l’Institut Léonard de Vinci MBA Management de la RSE et Performance des Organisations (MARPO), partagé aujourd’hui avec vous.

Outre son exhaustivité, il illustre la grande diversité des approches.

S’il existe sur le sujet des luttes de territoires et une volonté de réglementer, une étude approndie montre que bon nombre de principes sont quasi universels… Contextualisation, Inclusivité, Matérialité, Exhaustivité, Fiabilité, Clarté, etc…

Et que le point central, c’est la matérialité…

À la prochaine…