Released March 08, 2021 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Rising investor interest in environment, social and governance (ESG) issues creates new legal pitfalls for publicly traded Metals & Minerals companies, two speakers told attendees at the 123rd National Western Mining conference last week. While the speakers discussed the potential legal perils ESG disclosures could pose under U.S. securities laws, a practical concern also came to mind: Adding ESG issues to the already crowded conference slide about "required disclosures" could make the words unreadably small.
While executives at publicly traded mining companies may be tempted to accentuate, even embellish, their ESG credentials to win favor among investors and analysts, Jill Cooper, a lawyer and senior principal with Geosyntec Consultants Incorporated (Boca Raton, Florida), cautioned companies to take a more focused approach. "Companies that overlook ESG are not sustainable," she acknowledged on March 1. But rather than issuing broad and wide statements about a company's ESG performance, mining companies need to focus on the ESG issues that are most important to them. "The mining industry needs to do a better job of picking and choosing" which ESG issues are most important to them, she added.
"In many ways, ESG is a proxy for good management," Cooper continued. But "good management" is a general term and "best practices" vary across industries. She presented a four-cell "ESG Balance Sheet" that ranks ESG issues by the benefits they create and their impact on profitability. Companies should pursue activities that improved profitability as well as generated greater ESG benefits.
But no company can focus on all of the still-emerging ESG issues. She showed attendees a slide with 28 ESG issues and said companies should focus on the issues that are most material to them. "Defining what is unique to your business and stakeholders depends on your business strategy, projects and locations," she said at the event, which was co-located with MINEXCHANGE, the annual conference and expo organized by the Society for Mining, Metallurgy & Exploration (SME) (Lakewood, Colorado). She recommended mining companies condense all the ESG issues they face into a short list that derives from a company's strategy, targets and reporting.
Cooper noted that stock exchanges and the U.S. Securities and Exchange Commission (SEC) (Washington, D.C.), in addition to investors, are becoming more insistent that companies disclose ESG issues that have a material impact on a company's business. But that's difficult right now because ESG issues and metrics are rapidly evolving. For more on that, see August 31, 2020, article - Conference: ESG Coming to the Oil Patch, But Questions Remain on Metrics.
The session's other speaker, Chris Neumann, a principal shareholder at Greenberg Traurig, L.L.P. (Miami, Florida), a law firm, commented: "If companies are trying to get an ESG disclosure advantage, they could be tempted to issue false or misleading statements as defined by U.S. securities laws," most importantly the Securities Act of 1933 and the Securities Exchange Act of 1934. But Neumann also noted that state securities laws and consumer protection laws, as well as anti-fraud laws, also could pose ESG-related litigation risks.
It may be hard to believe that federal securities laws, passed nearly nine decades ago, could apply to an emerging issue like ESG, Neumann said. But he detailed recent decisions from U.S. courts on risk disclosures involving mining companies and said some of adverse settlements ran into the hundreds of millions of dollars. ESG may be a new issue, but federal securities laws were written to prohibit a broad range of corporate misbehavior.
Neumann urged mining executives to consider his "Top 10" list of ESG disclosure risks. One tip cautioned about attributing statements to officers. Another said that statements from contractors and joint venture partners, not mining companies themselves, could be actionable. A third stressed the need to be careful when citing data and statistics. However, aspirational statements and general statements about ESG are probably safe, he said.
Court decisions involving securities laws typically turn on whether a statement was false, misleading, or designed to deceive, Neumann told conference attendees.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
While executives at publicly traded mining companies may be tempted to accentuate, even embellish, their ESG credentials to win favor among investors and analysts, Jill Cooper, a lawyer and senior principal with Geosyntec Consultants Incorporated (Boca Raton, Florida), cautioned companies to take a more focused approach. "Companies that overlook ESG are not sustainable," she acknowledged on March 1. But rather than issuing broad and wide statements about a company's ESG performance, mining companies need to focus on the ESG issues that are most important to them. "The mining industry needs to do a better job of picking and choosing" which ESG issues are most important to them, she added.
"In many ways, ESG is a proxy for good management," Cooper continued. But "good management" is a general term and "best practices" vary across industries. She presented a four-cell "ESG Balance Sheet" that ranks ESG issues by the benefits they create and their impact on profitability. Companies should pursue activities that improved profitability as well as generated greater ESG benefits.
But no company can focus on all of the still-emerging ESG issues. She showed attendees a slide with 28 ESG issues and said companies should focus on the issues that are most material to them. "Defining what is unique to your business and stakeholders depends on your business strategy, projects and locations," she said at the event, which was co-located with MINEXCHANGE, the annual conference and expo organized by the Society for Mining, Metallurgy & Exploration (SME) (Lakewood, Colorado). She recommended mining companies condense all the ESG issues they face into a short list that derives from a company's strategy, targets and reporting.
Cooper noted that stock exchanges and the U.S. Securities and Exchange Commission (SEC) (Washington, D.C.), in addition to investors, are becoming more insistent that companies disclose ESG issues that have a material impact on a company's business. But that's difficult right now because ESG issues and metrics are rapidly evolving. For more on that, see August 31, 2020, article - Conference: ESG Coming to the Oil Patch, But Questions Remain on Metrics.
The session's other speaker, Chris Neumann, a principal shareholder at Greenberg Traurig, L.L.P. (Miami, Florida), a law firm, commented: "If companies are trying to get an ESG disclosure advantage, they could be tempted to issue false or misleading statements as defined by U.S. securities laws," most importantly the Securities Act of 1933 and the Securities Exchange Act of 1934. But Neumann also noted that state securities laws and consumer protection laws, as well as anti-fraud laws, also could pose ESG-related litigation risks.
It may be hard to believe that federal securities laws, passed nearly nine decades ago, could apply to an emerging issue like ESG, Neumann said. But he detailed recent decisions from U.S. courts on risk disclosures involving mining companies and said some of adverse settlements ran into the hundreds of millions of dollars. ESG may be a new issue, but federal securities laws were written to prohibit a broad range of corporate misbehavior.
Neumann urged mining executives to consider his "Top 10" list of ESG disclosure risks. One tip cautioned about attributing statements to officers. Another said that statements from contractors and joint venture partners, not mining companies themselves, could be actionable. A third stressed the need to be careful when citing data and statistics. However, aspirational statements and general statements about ESG are probably safe, he said.
Court decisions involving securities laws typically turn on whether a statement was false, misleading, or designed to deceive, Neumann told conference attendees.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
