CCRcorp Sites  

The CCRcorp Network unlocks access to a world of insights, research, guides and information in a range of specialty areas.

Our Sites


A basis for research and practical guidance focusing on federal securities laws, compliance & corporate governance.


An educational service that provides practical guidance on legal issues involving public and private mergers & acquisitions, joint ventures, private equity – and much more.


The “one stop” resource for information about responsible executive compensation practices & disclosure.

Widely recognized as the premier online research platform providing practical guidance on issues involving Section 16 of the Securities Exchange Act of 1934 and all of its related rules.


Keeping you in-the-know on environmental, social and governance developments

In recent days, State Street Global Advisors (SSGA) and Vanguard issued statements on ESG expectations for their holdings and proxy voting plans. BlackRock issued theirs last month as I wrote about previously.


SSGA expects Boards to play an active and direct role in identifying and managing human rights risks:

If risks related to human rights are material to the company, we expect further disclosures on

1. How the board oversees risks related to human rights;

2. Which human rights-related risks the company considers most material;

3. How the company manages and mitigates those risks; and

4. How the company assesses the effectiveness of its human rights risk management program.

The firm prioritizes engagement over divestment of holdings:

We will engage companies on this topic, prioritizing companies with the highest risk of human rights violations… As is our standard practice, we will first approach this issue through engagement. If we identify laggards that are not adequately managing risks related to human rights, we will consider taking voting action against directors and on relevant shareholder proposals. When voting on shareholder proposals related to human rights, we will assess a company’s alignment with the five expectations outlined above and vote accordingly. While we plan to address human rights through voting and engagements, we believe that the responsibility of managing these risks lies with a company’s board and management.

On climate matters, SSGA issued two separate documents – one on climate disclosures in general and one specifically addressing climate transition plan disclosure that includes an element of holding board members responsible.

  • Climate disclosure: SSGA expects their portfolio companies to provide public climate disclosures following the TCFD framework. Far more surprising is this:

We expect companies in carbon-intensive sectors to incorporate climate considerations into capital allocation decisions, such as for existing or planned projects, portfolio decisions, and financial planning. Companies are establishing a price for carbon (also known as a “carbon price”) to capture and monetize the costs/impacts of their activities as they relate to climate change. It allows for companies to express and incorporate the cost of operations, compliance, and future regulations into strategic decision-making. We evaluate if companies take forecasted carbon pricing into account for project assessment and encourage disclosure of the average and/or range of carbon price assumptions used.

  • Transition plan disclosure: “In 2022, we will launch an engagement campaign on climate transition plan disclosure targeting significant emitters in carbon-intensive sectors. Starting in 2023, we will be prepared to hold directors accountable if these companies fail to show adequate progress on meeting our disclosure expectations.” 


Last week I wrote about Vanguard’s position on holdings with significant coal exposure, but the investor did not stop with that statement. In their broader 2022 proxy voting policy, Vanguard will work to hold Boards accountable for oversight failures related to climate and other ESG matters.

Consistent with current policy, the Vanguard funds will consider an accountability vote against a director or committee for governance or material risk oversight failures. The following clarifies considerations regarding climate risk oversight:

– the materiality of the risk

– the effectiveness of disclosures to enable the market to price the risk

– whether the company has disclosed business strategies, including reasonable risk mitigation plans in the context of anticipated regulatory requirements and changes in market activity in line with the Paris Agreement or subsequent agreements; and

– company-specific context, market regulations. and expectations.

In addition, the fund “will also consider the board’s overall governance of and effective independent oversight of climate risk.” Addressing failures beyond just climate matters, Vanguard states “Evidence of failure to provide appropriate governance oversight and/or evidence of failure to oversee material or manifested risks, including those that may be considered ‘social’ or ‘environmental’ will be taken into account.”

In terms of how the firm positioned itself on shareholder ESG proposal, no specific commitments were made other than to assess and vote on a case-by-case basis on the individual merits of each. However, the document does provide a list of ESG proposal types that a fund “is likely to support”.

What This Means

BlackRock, SSGA and Vanguard are significant shareholders of every major publicly traded company in the U.S. – and then some. If you work in a publicly traded company, you should expect the Big 3 to knock on your door. But they each have a slightly different knock. It will be well worth investing time to find commonalities to make data gathering, validation and reporting efficient for you, as well as preventing Board conflicts. Here are a few considerations:

  1. Download the ESG expectations guidance from each investor and read them carefully. Look for similarities and differences – some may be more important than others in your specific situation. Use the similarities to guide you in planning, but be prepared to undertake certain activities that are specific to only one investor (such as SSGA’s position on carbon pricing).
  2. If you are not already doing so, plan on issuing public ESG disclosures in 2022. At a minimum, the disclosures should include:
    • Climate information aligned with TCDF.
    • Validated quantified Scope 1 greenhouse gas emissions that include all applicable greenhouse gases, not just CO2.
    • Scope 2 and 3 emissions data, or a status on, and detailed plan for, obtaining that information.
    • Explicit disclosure of relevant assumptions and limitations associated with GHG emissions data, expectations and commitments.
    • Discussion of specific plans, assumptions and limitations for a low carbon economy transition.
    • Explicit and detailed discussion of the governance structure and processes for environmental and social disclosures, strategies and program implementation.
    • Discussion of ESG competence/qualifications of key Board members and their role in the ESG governance structure.
    • Other matters I didn’t discuss here but Liz touches on here and here in
  3. In the report, emphasize actions taken over discussions of grandiose plans for the future. Acknowledge where reality didn’t match company plans or expectations, explain what you learned and how gaps will be closed realistically.
  4. Avoid the cocktail table book ESG report – keep it focused, concise and clear. Reconsider the urge to fill pages with pictures of wildflower fields, children, deer and trees.As we have have written in the past (for instance, here and here), now is the time to get your internal controls in high gear to ensure data reported publicly and to investors is accurate and verified.
  5. Take action to improve the ESG chops of board members, but don’t think that having them participate in a half-day on-line training session will suffice. Develop a robust training/awareness/education plan that includes regular updates on new developments and trends in ESG, or ensure new board members have ESG qualifications.

Back to all blogs

The Editor

Lawrence Heim has been practicing in the field of ESG management for almost 40 years. He began his career as a legal assistant in the Environmental Practice of Vinson & Elkins working for a partner who is nationally recognized and an adjunct professor of environmental law at the University of Texas Law School. He moved into technical environmental consulting with ENSR Consulting & Engineering at the height of environmental regulatory development, working across a range of disciplines. He was one… View Profile