Environmental, Social, and Governance

Shareholder derivative and other lawsuits have challenged the actions of corporate board members relating to ESG issues. For example, investors have brought derivative lawsuits against corporate boards alleging violations of fiduciary duties or other obligations by failing to fulfill commitments to diversity goals or by tolerating discrimination. In other cases, plaintiffs have alleged that executive compensation should be tied more closely to progress on diversity, equity, and inclusion (DEI) issues.

In these matters, Cornerstone Research has evaluated the activities of officers and directors to determine whether they acted prudently and in a manner consistent with their roles and fiduciary duties. These analyses have addressed corporate decisions, marketing statements, and oversight of internal audits and processes, among other topics. We have also addressed the incentive structure of executive pay, and whether a company’s board or its compensation committee has acted appropriately in establishing compensation packages for corporate officers.

A number of recent government proposals would impose disclosure requirements regarding climate change, human capital management, and board diversity. Cornerstone Research has addressed the appropriateness and materiality of corporate disclosures in the context of mergers and acquisitions, annual proxy statements, and SEC filings.

The SEC is expected to exert heightened scrutiny on products focusing on sustainability, such as “green” investment funds. The SEC has raised concerns regarding “greenwashing,” disclosures of ESG investment processes, risks stemming from the implementation of ESG investment criteria, and proxy voting policies and procedures. Cornerstone Research has been retained on enforcement matters brought by the SEC that address investment management issues and has developed expertise with ESG ratings providers and investment criteria.

The investments selected for, fees charged for, or the performance of ESG funds may also be challenged by investors or participants in employer-sponsored retirement plans. Cornerstone Research has been retained in numerous 401(k) and 403(b) fee and investment cases involving plan sponsors and service providers. We have addressed investment management fees, investment performance, asset allocation, and investment selection and monitoring.

Plaintiffs in class actions and shareholder derivative lawsuits have alleged that companies tolerate or engage in gender or racial bias. Cornerstone Research staff and experts are well-versed in the statistical and econometric techniques used to evaluate alleged discrimination in a variety of contexts, including promotion and pay as well as pre-litigation consulting on pay equity issues. Similarly, our staff and experts have been retained to analyze corporate culture.

In a number of matters, consumers have made claims relating to products’ compliance with environmental regulations or the allegedly false marketing of products as “environmentally friendly.” We have experience addressing economic, marketing, and consumer behavior issues in matters involving alleged product defects associated with “environmentally friendly” claims as well as false advertising involving “greenwashing” or similar allegations.