Joele Frank and the Paul, Weiss ESG and Law Institute hosted a senior level roundtable discussion on “The Rise of Human Capital Issues in 2024: Legal, Governance and Investor Perspectives” in person at Paul, Weiss’s New York office.

The program featured insights from senior communications, legal, compliance and ESG professionals who shared their expertise on how to assess, align and communicate human capital and DEI strategies, goals and metrics with the organization’s business objectives and values considering the increasingly complex landscape.

Throughout the session, the group discussed the importance of getting under the hood of their human capital and DEI efforts, assessing the current state of the company’s policies and programs, and identifying what is material and relevant to the company and its stakeholders. They also emphasized the value of employee engagement as a key performance indicator (KPI) to measure the effectiveness and quality of human capital and DEI initiatives, and shared best practices for organizing focus groups and employee surveys to gather feedback, identify gaps and opportunities for improvement.

The group also explored the challenges and opportunities of communicating their human capital and DEI efforts and achievements to various internal and external audiences, including employees, customers, business partners, investors, regulators and the media. They highlighted the importance of regular and consistent communication and engagement with employees, noting that they act as a “vessel to the outside world.” Employees are the main ambassadors of the company’s culture and reputation and should be educated and empowered to share the company’s values and goals. The participants also discussed the legal and regulatory landscape, and how to monitor and respond to potential challenges and changes, such as the Supreme Court’s decision on affirmative action and the SEC’s plans to propose a human capital disclosure rule. They spoke about the value of looking at well-established frameworks for inspiration, such as the Task Force on Climate-Related Financial Disclosures (TCFD), while also looking to incoming frameworks, such as the International Sustainability Standards Board (ISSB) which includes emphasis on human capital management. Both serve as guides for preparing and prioritizing governance, strategy, risk mitigation and metrics.

Finally, the participants shared their insights and best practices on how to proactively and effectively engage with institutional investors and proxy advisors. These stakeholders are increasingly scrutinizing human capital issues and seeking more transparency and accountability from companies, an emerging trend this proxy season.

What to do now

  1. Audit policies, programs, disclosures and statements for consistency, and look for opportunities to refresh in light of the current environment
  2. Identify human capital, DEI and ESG key performance indicators (KPIs) to measure the effectiveness and quality of these human capital management programs
  3. Actively engage internal and external stakeholders to identify their expectations and align programs with the company’s values and goals, while accounting for emerging risks

» view key takeaways from the discussion

Dave Curran, executive director of the ESG + Law Institute and co-chair of the Paul, Weiss ESG Advisory Practice, was a featured guest on the fourth episode of Practising Law Institute’s Fast Tracked: Emergent Issues in the Legal Profession podcast.

In the episode, “The Evolving State of ESG Initiatives,” Dave discusses ESG initiatives in the legal industry, including how corporations are aligning governance to ensure fulfillment of public commitments on social, governance and environmental issues, and how law firms are developing practices that support these efforts, among other topics.

» listen to the podcast

On February 1, Russell Reynolds Associates and the Paul, Weiss ESG and Law Institute hosted a senior level luncheon discussion on “The Evolving Nature of Sustainability Through AI” in person at Russell Reynold’s New York office.

The program featured insights from over 30 senior AI, sustainability, risk, compliance and legal personnel who shared their expertise on how AI is shaping the next chapter of sustainability, and discussed better practices for learning and leveraging such tools.

As the landscape of technology and artificial intelligence programs continues to develop rapidly, organizations are increasingly seeking to understand how these products may impact their business operations and advance their sustainability initiatives.

Throughout the session, the group shared their thoughts on how AI tools can assist with the collection, tracking and reporting of sustainability and ESG data, particularly automating processes that have traditionally been done manually.

  • As regulation and standardized reporting increases globally, attendees highlighted the ability of AI tools to help visualize and contextualize the various requirements and determine relevance for a given organization.
  • Generative AI can also be used to help forecast where regulation is going, and predict outcomes based on current trends.
  • Reliance on technology without proper oversight can generate risk, including hallucinations and falsified data.
  • Making sure accountability structures are in place and data input is trustworthy can help build confidence in the results and create a better likelihood of success.

Attendees discussed the importance of developing AI and sustainability expertise at all levels – employees, management and board – to help build necessary oversight and accountability efforts.

  • The group shared different strategies for training and retaining appropriate talent, including development of educational programs and resources for employees, creation of internal working groups and task forces, recruitment of management and board personnel with specific expertise, and designation of board oversight to committees  such as audit or nom/gov.
  • They emphasized the importance of keeping a people-first mindset and grounding the use of technology and AI in the people who use it.
  • Making sure employees understand how AI fits within the context of the organization and ensuring that tools are leveraged properly and to their fullest extent.

Lastly, attendees discussed acceleration risk and the value of incremental change.

  • While it is important to evolve with the times, rushing development and implementation of sustainability and AI strategies and tools can result in increased risk exposure.
  • Consistent, progressive and intentional change can lead to longer-term value and mitigate potential gaps and weaknesses.

» read the takeaways

ESG + Law Institute Executive Director and Paul, Weiss Sustainability and ESG Advisory Practice Co-Chair Dave Curran and Paul, Weiss ESG Practice Director Madhuri Pavamani outline key ESG trends for companies to consider as they prepare for 2024 in an “Expert Opinion” column in Corporate Counsel.

The article, “2024 ESG Outlook: Key Trends to Follow,” published on February 6, covers some of the past year’s most important legal and regulatory developments, including the U.S. Supreme Court’s affirmative action decisions, the rapid growth of AI, increased scrutiny of supply chain labor and new climate disclosure rules in the U.S. and abroad. Dave and Madhuri provide insight into these topics and how general counsel can plan for potential impacts.

» read the article

 

California Gov. Gavin Newsom recently signed into law three climate-related disclosure bills. Under two of the laws, U.S. companies that satisfy monetary thresholds and do business in California will be required to publicly disclose their direct and indirect greenhouse gas (GHG) emissions and climate-related financial risks. The third law, which applies to all companies operating in California that make claims about net zero, carbon neutrality, significant GHG reductions, or that purchase or use carbon offsets, requires public disclosures to substantiate all such claims.

This memo provides a high-level overview of the scope of these laws, including reporting obligations, reporting deadlines and penalties for noncompliance.

» view the report

Earlier this year, Paul, Weiss’s ESG and Law Institute signed on its second academic partner, Howard University School of Law. Dave Curran, executive director of the Institute, recently sat down with Howard University School of Law Dean Danielle Holley-Walker and Paul, Weiss partner Secretary Jeh Johnson to discuss the partnership’s impact.

Litigation partner Katherine Forrest, corporate partner Jonathan Ashtor and ESG and Law Institute Executive Director and Paul, Weiss Sustainability and ESG Advisory Practice Co-Chair Dave Curran co-authored an “Expert Opinion” column in Corporate Counsel, “The Intersection of Artificial Intelligence and ESG,” published on June 20.

The authors examine the extraordinary potential of AI tools to advance ESG goals, such as ensuring company compliance with ESG guidelines and regulations through large-scale data review, generating policies and procedures that better align with prior ESG commitments, and quantifying the progress of ESG initiatives, among others. They also outline the potential pitfalls of leveraging AI tools, such as data set biases, environmental tradeoffs, governance and reputational considerations, potential litigation and deal-related risks, while noting that many concerns can be mitigated by taking inventory of available AI tools and understanding how they function.

“To mitigate risk, AI should be explainable, trustworthy and reliable,” the authors note. “The use of AI tools may also require new or revised frameworks, standards, regulations and codes of conduct, as well as multi-stakeholder dialogue, consultation and collaboration.”

» read the article

On May 9, ESG and Law Institute Executive Director and Paul, Weiss Sustainability and ESG Advisory Practice Co-Chair Dave Curran and Paul, Weiss partners Katherine Forrest and Jonathan Ashtor co-hosted an in-person event, “Navigating AI Risk Management from an ESG Perspective,” in collaboration with Deloitte Touche at Paul, Weiss’s New York office.

The program featured a learning session addressing core AI concepts, including use cases and definitions for different AI modeling approaches; the machine learning development lifecycle; and common model evaluation metrics. The learning session was followed by an off-the-record, roundtable discussion with AI experts from Paul, Weiss; Deloitte; and Oracle focused on the value of risk management in addressing legal, ethical and reputational implications of AI, particularly given the rise of generative AI.

» read our takeaways from the discussion

Dave Curran, executive director of the Institute and co-chair of the Paul, Weiss ESG Advisory Practice, and Paul, Weiss corporate associate Reco Charity participated in the inaugural “Navigating the Sustainable Organization Symposium,” hosted by Syracuse University’s Dynamic Sustainability Lab.

Dave moderated “Fireside Chat with Chief Sustainability Officers,” which included chief sustainability officers from Colgate-Palmolive Co., Deloitte, Persefoni and Under Armour. Reco spoke on the panel “Careers in Corporate Sustainability: Entry into the Marketplace.”

The symposium focused on the incorporation of ESG in modern-day organizations, including issues of rapidly changing and challenging governance strategies. It featured a range of speakers, including industry leaders, NGOs, corporations, media professionals and government officials.

The event was held on April 3 in Washington, D.C.

Paul, Weiss’s ESG and Law Institute, in partnership with the FiscalNote Executive Institute, will co-host a course “Ethical Use of AI and the Emerging Legal Landscape,” the last in a series of three continuing legal education courses focused on top issues in digital transformation and environmental, social and governance (ESG).

The course will explore the wide range of new legal challenges accompanying the emerging area of artificial intelligence, including aspects of a strong ethical AI program, mitigation of high-risk AI and AI and discrimination.

The course offers CLE credit and will take place on September 22 at 10 a.m. ET.

» register here