In a recent blog posting on the Wisconsin State Bar Business Law Section blog, I wrote the following about Environmental, Social, and Governance (ESG) programs:

In connection with ExxonMobil’s annual meeting held on May 26, 2021, three dissident directors nominated by hedge fund Engine No. 1 were elected to ExxonMobil’s board, beating out the incumbents.

Engine No. 1 had proposed the director nominees (along with one other) to help lead ExxonMobil to long-term shareholder value creation, including through “net-zero emissions energy sources and clean energy infrastructure.”[1]

The fact that these dissident directors won the election over the incumbents indicates the increasingly broad shareholder support for clean energy to reduce climate change.

ExxonMobil is not alone in facing an investor challenge to its strategy in favor of a more carbon-neutral strategy. . . . 

Most public companies have ESG programs that address the environmental, social, and governance impacts of their business. In fact, according to a Navex Global survey, over 80% of surveyed public companies have ESG programs in place, as do over 65% of surveyed private companies.[2]

An ESG program is a set of company-set standards that address the environmental, social, and governance impacts of the company’s operations. Notably, no law currently requires that a company have an ESG program. Yet companies adopt them for a myriad reasons.

You can access the complete posting here.

[1] ExxonMobile Corporation, Proxy Statement of Engine No. 1 LLC, March 15, 2021 (available at Proxy Statement (reenergizexom.com)).

[2] Navex Global, Environmental, Social and Governance (ESG) Global Survey Conducted by NAVEX Global Reveals Strong Adoption Across Public and Private Companies, Feb. 20, 2021.