Worldwide: Corporate Law Developments (January 27, 2017)

This week's corporate law news roundup includes discussions of the G20 Task Force December 14, 2016 release of recommendations for disclosures by companies as to climate-related financial risks and opportunities, with public comment due February 12, 2017; the publication by the European Union’s Department for Business, Energy & Industrial Strategy (BEIS) of regulations effective January 1, 2017 requiring certain reporting obligations as to environmental and social issues (including diversity policies) by certain large public interest entities and large credit and insurance institutions (toward improved transparency for international investors); and the publication by the Council of Institutional Investors (CII) of its “Frequently Asked Question: Majority Voting for Directors” (FAQ) Guide advocating meaningful consequential majority voting for directors.


In connection with the 2015 Paris Accord, on December 14, 2016, the G20 Financial Stability Board Task Force on Climate-Related Financial Disclosures (G20 Task Force) issued voluntary climate-related disclosure guidance for investors, lenders and insurance underwriters to facilitate the correct pricing of the financial impact of global climate change though consistent global disclosure standards. In most G20 jurisdictions, companies with public debt or equity have legal obligations to disclose material risks (including material climate-related risks) in their financial reports. Because the rules in such jurisdictions lack consistency (as a result of which there is no standardized disclosure framework in place), the G20 Task Force has developed recommendations that apply to financial-sector organizations including banks, insurance companies, asset managers and asset owners, including recommendations with regard to: (a) governance and board oversight of climate-related risks and opportunities, (b) short, medium and long-term strategies, (c) risk management and (d) metrics and targets used to assess climate-related risks and opportunities. The 60-day public consultation period for procuring public views on the G20 Task Force's recommendations ends February 12, 2017; an updated G20 Task Force report is anticipated to be delivered in June 2017. For more information, see


Toward improving the transparency of certain European Union companies with regard to non-financial and diversity information (and to implement the EU Non-Financial (NF) Directive approved by the EU in September 2014), the EU’s Department for Business, Energy & Industrial Strategy (BEIS) has published regulations effective January 1, 2017 imposing on certain large public interest entities reporting obligations as to environmental and social issues. Companies with securities admitted to a regulated EU market (called large public interest companies), and credit and insurance institutions with more than 500 employees, will be required to provide a non-financial statement that discloses items such as material environmental and social information, employee matters, respect for human rights and anti-corruption and bribery in their annual reports published beginning 2018. The EU NF Directive also requires disclosures relating to business models, principal non-financial risks and non-financial key performance indicators, as well as additional information in such companies’ corporate governance statements (including as to their diversity policy, covering age, gender, geographical diversity and educational and professional background). The new rules complement the U.K.'s narrative reporting regulations, although they may cover certain U.K. entities that previously were not subject to the U.K. regulations. For more information, see


On January 5, 2017, the Council of Institutional Investors (CII) addressed the issue of varying majority voting standards across corporations by publishing a guide entitled Frequently Asked Question: Majority Voting for Directors (FAQs) advocating meaningful consequential majority voting for directors. Under the FAQs, meaningful consequential majority voting means that directors must depart when they receive more "against" than "for" votes. The CII noted that according to FactSet, almost 90% of S&P 500 companies have a traditional form of majority voting, compared with only 29% of Russell 2000 companies that use a majority voting standard in uncontested elections. The CII also reported that only a handful of U.S. companies provide for consequential majority voting. The CII released the FAQs to encourage companies to adopt strict majority voting instead of one of three other iterations of voting, including (a) plurality voting, whereby board nominees who receive the most "for" votes are elected until all Board seats are filled, (b) a “plurality-plus” voting standard in which a nominee who fails to receive majority support is legally elected to another term subject to Board acceptance of such nominee’s resignation (and in which a nominee may be elected with one vote in an uncontested election), and (c) majority voting with a resignation that the Board may refuse to accept. The CII sees consequential majority voting for directors as very significant to (and desired by) shareholders: the CII noted that according to FactSet, between 2013 and 2016, 89 management proposals for a strict majority vote standard received the support of 98% of shareholders. For more information, see

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