Public companies and a growing number of private companies are increasingly expected to adopt strong and transformative Environmental, Social and Governance (ESG) strategies, programs and policies. These initiatives are designed to unlock shareholder value by extending the traditional bottom line to non-financial considerations such as a company’s sustainability and climate impact and commitment to human and labor rights, diversity and inclusion, and transparent governance.

Companies and their ESG-related policies face heightened scrutiny from key stakeholders – including investors, government regulators, consumers and rating agencies. While the failure to respond meaningfully to the ESG movement can create significant business, financial and reputational risk, so can a company’s efforts to respond.

To minimize litigation and reputational risk, companies should conduct regular compliance reviews of their ESG corporate policies and programs and carefully examine all ESG-related public disclosures and statements to confirm that they accurately reflect its ESG policies and programs. While there are no federal mandates specifically aimed at ESG-related disclosures, the climate of increased corporate social responsibility, along with a new administration, suggests that we could see changes at the federal level.