Navigating ESG issues during the private fundraising process
Legal theories
Consumer protection claims
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State consumer protection laws prohibit “unfair and deceptive acts and practices”
AGs have broad discretion to define what is "unfair and deceptive"
Fiduciary duty claims
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Duty of loyalty: Sole objective must be maximizing client's financial returns
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Other objectives reflect inappropriate "mixed motives"
Social or "political" goals such as climate and diversity gains (NYC pension plan action)
Joining pro-ESG initiatives shows manager's mixed motives, including in ostensibly non-ESG products
Duty of care: No reasonable basis to believe ESG investing maximizes financial returns, as underlying
assumptions are factually unsupported
Antitrust claims
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Group boycott / concerted refusal to deal
Anticompetitive standard setting
ROPES&GRAY
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Anticompetitive information sharing
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