Global investor interest in sustainable and responsible investment continues to accelerate at a rapid pace. The Global Sustainable Investment Alliance (GSIA) estimates $23 trillion in global assets are managed under responsible investment strategies, representing a 25% increase since 2014. Responsible investment strategies consider environmental, social and governance (ESG) factors in portfolio selection criteria and management with the belief that better corporate ESG profiles result in fewer disasters and corporate scandals. Investment policies that integrate ESG criteria tend to express investor values specific to weapons, carbon emissions, fossil fuel reserves, labor conditions, human rights, corporate governance, executive compensation and other concerns aimed at solving social or environmental problems. Corporate engagement and shareholder activism are also strategies investors are increasingly using to influence corporate behavior driven by ESG guidelines.

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Selected ESG related articles and recent matters: 


EU Agrees on New Requirements Regarding Sustainable Investments and Sustainability Risk Disclosures
On March 7, 2019, the European Parliament and European Union countries agreed on new rules on the disclosure and transparency requirements for sustainable investments made by asset managers. The rules require money managers, insurance companies, pension funds and investment advisers to integrate environmental, social and governance (“ESG”) factors into their portfolios, to report ESG risks and opportunities as part of their fiduciary duty, and to include a transparency framework so end-investors can better understand how asset managers take sustainability factors into account.

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Investment Professionals Increasingly Focused on ESG Factors
At the close of 2018, the marketing firm Edelman released its second annual Special Report: Institutional Investors, a supplement to The Edelman Trust Barometer, which measures global trust in business, government, media and NGOs. The report surveyed more than 500 chief investment officers, portfolio managers and buy-side analysts across five countries to capture insights and observe trends from some of the world’s most powerful institutional investors. Responses showed that in addition to financial metrics, investors increasingly incorporate ESG (Environmental, Social, and Governance) factors into their strategies.

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Aon Survey Shows 68% of Global Investors Consider Responsible Investing Important
Aon Hewitt Investment Consulting (“Aon”) recently released results of a survey, Global Perspectives on Responsible Investment, which shows that 68% of investment professionals considered responsible investing (“RI”) important to their organizations. Aon launched the survey after noting a dramatic increase in the number of institutional investors exploring or implementing RI initiatives. The results confirm significant interest in RI among institutional investors globally.

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Large Investors Ask SEC to Issue Rules on ESG Disclosure Standards
Investors are demanding greater transparency of publicly traded companies on environmental, social, and governance (“ESG”) issues. On October 1, 2018, legal experts and ESG advocates, as well as investors, state treasurers, public pension funds and unions representing more than $5 trillion in assets under management filed a Request for rulemaking on environmental, social, and governance (ESG) disclosure with the U.S. Securities and Exchange Commission (“SEC”). The petition asks the SEC to develop a framework requiring issuers to make uniform disclosures of ESG information.

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Ninth Circuit Holds No Duty to Disclose Unfair Labor Practices under California Consumer Protection Law
On June 4, 2018, the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a class action alleging that Mars, Inc. had a duty under California consumer protection laws to label goods as possibly being produced using slave or child labor. Hodson v. Mars, No. 16-15444 (9th Cir.).

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D.O.L. Qualifies ERISA Fiduciaries’ Obligations Regarding ESG Considerations
On April 23, 2018, the U.S. Department of Labor released Field Assistance Bulletin (“FAB”) 2018-01 qualifying Interpretive Bulletins (“IB”) 2015-01 and 2016-01, which seemed to allow some latitude for fiduciaries to consider ESG factors in investment decision-making.

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