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Risk and Governance

The way in which businesses govern themselves, manage risk and engage with their stakeholders is under unprecedented scrutiny. Amid the introduction of numerous legislative requirements by regulators, the rise of soft law standards, and increasing accountability to those outside the organisation, multinationals and other large companies face complex compliance challenges and difficult choices around governance and reporting requirements.

Where an organisation is perceived to be ignoring calls for a shift in focus towards long term sustainability and responsible business, we are seeing increasingly imaginative legal routes being taken to seek to hold them to account.

Our multi-disciplinary Risk & Governance team advises on the complex interplay between hard law, soft law and stakeholder expectations in this area, helps businesses understand applicable regulatory requirements, and assists in the development and implementation of strategies and systems to support compliance.

Our Crisis Response team also stands ready to support you if you face a particularly challenging set of circumstances. We work with our clients to develop strategies to navigate complex crises, respond to criticism and engage with disputes.

How Linklaters can help you

ESG transparency, disclosures and reporting

Numerous regulatory regimes and soft law standards have been introduced in recent years which ask businesses to report on a range of sustainability-related topics. For example, the Non-Financial Reporting Directive, EU Conflict Minerals Regulation, Modern Slavery Act, the UN Guiding Principles on Business and Human Rights and the Task Force on Climate-related Financial Disclosures.

We help our clients understand what information needs to be disclosed and where, assist in identifying market trends and best practice and help align disclosures with business strategy and policy commitments.

ESG data, analytics and ratings

As the focus from investors, stakeholders and the wider public on ESG issues increases, the role of ESG data, analytics and ratings will become ever more important. Ratings, and the data that businesses make available in the public domain, could have both positive and negative financial and reputational impacts. A negative ESG rating could hinder access to finance or lead to public criticism, for example, and organisations will be keen to understand what they can do to improve the perception of their ESG performance.

Our team can help critically analyse ESG ratings to help businesses better understand how they might improve their scores. Our team can also advise on strategic approaches to transparency and the content of specific disclosures as well as on building a credible ESG narrative to support access to finance, stakeholder engagement and investor relations.

Investor and other stakeholder engagement

As investors, shareholders and other stakeholders take an increasingly active role in influencing ESG strategy and ESG-related transparency, the way in which our clients engage is rapidly evolving.

Our multi-disciplinary team is experienced in assisting clients in managing interactions with a range of different stakeholders. We have advised on general engagement strategies, on shareholder resolutions and AGMs, responses to NGO campaigns and criticism, and on managing legal claims and crisis situations.

Sustainable finance

The rise of ESG is having an unprecedented impact on the financial landscape, giving rise to new challenges in accessing finance as well as new opportunities for those developing green or sustainable projects. New regulation will only increase the focus on this area.

Our integrated team is here to help on all aspects of sustainable finance and is adept at navigating the hard and soft law requirements relevant to this area as well as wider strategic considerations relevant to seeking or making investment.

For more information, visit our Sustainable Finance page.

Antitrust

Until recently, ESG and “competition law” weren’t often used in the same sentence. But this is changing rapidly. From a desire to co-operate to achieve green objectives, to environmental factors that are driving a deal and sustainability commitments becoming part of a State aid package, an understanding of how competition rules can impact a company’s ESG agenda is crucial. To understand more about the competition law issues, take a look at our Competition and Sustainability Blog Series.

Our Competition/Antitrust team advises on the interplay between ESG factors and competition rules in all areas including co-operation between competitors, merger control issues and State aid. Our team delivers clear, commercial advice allowing you to pursue your ESG goals with a clear understanding of the level of competition risk on a global basis. We offer innovative solutions to achieve your aim drawing upon our deep strategic and agency insights.

Remuneration and incentives

Our experienced team can help you navigate through the ever-increasing regulatory requirements and investor expectations to incorporate ESG considerations into reward design and disclosure. The team takes a holistic approach, analysing how these considerations interact with current remuneration rules and internal practices to ensure a seamless offering.

Learn more about our Employment & Incentives practice.

Risk management and compliance

The challenges organisations face today are clear: geopolitical uncertainty, myriad ESG-related rules and regulations, heightened scrutiny by investors, consumers and other stakeholders and technological disruption, to name a few. Against this backdrop, taking a more structured and robust approach to risk management has become increasingly important and is now firmly on board agendas.

For some, risk has become shorthand for compliance. Our multi-disciplinary team delivers a more holistic approach, helping clients identify, manage and mitigate strategic risks, and design and implement compliance frameworks that will drive behavioural and cultural change within organisations.

Good governance

Good governance is critical to ensuring a strategic approach to ESG, developing sustainable corporate strategies, making robust decisions and setting the right tone from the top. Increasingly businesses are looking at their governing bodies and reviewing their composition and decision-making processes to ensure they keep pace with the changing world around them.

Our multi-disciplinary team draws upon the strength and breadth of their market expertise to support organisations review and update their governance processes, and design governance frameworks to keep apace of emerging ESG trends.

Crisis management

If things do go wrong, we understand the need to move swiftly and comprehensively. Our multidisciplinary crisis response team can mobilise quickly to help you respond to the issues you are facing, offering you the support you need, wherever you need it, fitting into your own crisis management team and collaborating with your other advisers.

We are experienced in navigating the crucial first 72 hours of any crisis, and then working with clients to build a cohesive crisis response framework, undertake investigations and advise on engagement with regulators, investors and other stakeholders.

As part of our 360-degree offering, we can also help with lessons-learned and root cause reviews to help design and implement appropriate preventative measures to reduce the risk of recurrence shore up operational resilience.

For more information, visit our Crisis Management page.

Managing Transactional Risk

Environment and health and safety matters are highly regulated in many countries. Regulators, individuals and special interest groups are increasingly willing to pursue organisations (and in some cases multinational parent companies) for environmental or social wrongs.

Our lawyers advise on the full range of environment, health and safety and social issues, including environmental permitting, contaminated land, environmental damage, waste management, water, emissions, chemicals regulation, industrial disease, health and safety, social and human rights issues. We also advise on emerging regulation and enforcement trends, to help you anticipate issues and position yourself for incoming requirements.

The team provides real-time and practical solutions to optimise outcomes and mitigate disruption to business or to any contemplated transactions.

Our key Risk and Governance experience

Helping clients make robust disclosures

  • Advising a range of corporates and financial institutions on disclosure requirements associated with the TCFD and incoming EU sustainable finance legislation and what they should do to prepare for these.
  • Advising financial services firms on the upcoming EU ESG remuneration disclosure rules and providing training to corporate boards on ESG remuneration factors.
  • Advising a range of organisations on the preparation of their modern slavery statements, annual reports, and sustainability reports and the work required to verify their content.

Understanding competition rules when pursing ESG goals

  • Advising on the antitrust issues associated with developing and implementing a fair trade ethical certification.
  • Advising FMCG companies on various aspects of the interplay of competition law and ESG.
  • Advising on antitrust risks associated with competitor collaborations to achieve environmental aims.
  • Advising a client in the mining sector on the competition aspects of a blockchain project relating to traceability.

Getting your house in order – risk management and compliance

  • Preparing or updating ESG policies, due diligence questionnaires and designing decision trees to triage ESG issues escalated for risk assessment.
  • Advising a number of major corporates on human rights impact assessments, their position under the UN Guiding Principles on Business and Human Rights, and suggested mitigation measures.
  • Advising a construction products manufacturer on the development of a robust compliance system addressing product quality, facilitating scenario analysis and strategic decisions on product offerings in a sensitive crisis context.

There for you during a crisis and beyond

  • Advising a number of corporates on their response to high profile cyber attacks and data security issues.
  • Advising a corporate on crisis response, regulatory matters, engagement with regulators, stakeholders and its response to a public inquiry.
  • Undertaking a ‘lessons learned’ review of the governance processes and corporate culture within an organisation following a high-profile product liability issue.

Optimise outcomes and mitigate transactional risk

  • Advising a major industrial corporate on the acquisition of a metals business with significant environmental legacy issues.
  • Advising BP on the environmental aspects of its $5bn sale of its Acetyls and Aromatics businesses to INEOS, the global manufacturer of petrochemicals, speciality chemicals and oil products.
  • Advising sponsors, lenders and export credit agencies on environmental and social issues, including the application of soft law standards, on a range of market-leading project financings, including the US$36bn Yamal Arctic LNG Project and the US$5bn Nacala rail project in Mozambique and Malawi.

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"ESG" in the broadest sense covers environmental, social and governance issues but consensus on details of the meaning can vary and public perceptions are changing rapidly.

Our ESG team has a robust understanding of the regulatory and policy drivers of the market and experience across a wide range of sectors and contexts. We take a holistic approach, covering a wide range of areas - from climate change and resource efficiency, human rights and community engagement, antibribery and corruption, transparency and disclosure, product governance, and risk management more generally.

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