Asia: China’s Supreme People’s Court Issues Guidance on Environmental Claims
On August 14, 2023, the Supreme People’s Court of China (“SPC”) issued the Judicial Interpretation on the Applicable Law Issues of Environmental Tort Cases (“Judicial Interpretation”) and Regulations on Civil Litigation Evidence of Environmental Tort Cases (“Regulations”). The two sets of rules enter into force on September 1, 2023.
The Judicial Interpretation consists of 29 articles that clarify six key legal issues, namely:
- the scope of environmental tort cases, namely pollution by air, water or soil causing personal or property damage;
- liability of joint tortfeasors;
- liability of environmental services companies, providing that polluting entities entrusting an environmental service company to operate their environmental protection facilities remain liable unless they also entrust an environmental service company to dispose of pollutants;
- piercing the corporate veil, providing that an injured party may seek compensation against the polluting entity as well as its shareholders in certain circumstances;
- the protection of environment-related interests, providing that the polluting entity may be liable, in certain circumstances, for its impact on activities such as water extraction, fishing, and hunting; and
- contributory negligence.
The Regulations consist of 39 articles and aim to clarify five issues relating to evidence, such as burden of proof, standard of proof (which is set at “a high degree of probability”), and assessment of damages (listing a number of factors for judges to consider). While Judicial Interpretation only deals with environmental tort cases brought by injured parties, the Regulations also apply to environmental public interest litigation initiated by NGOs or public prosecutors.
Judicial Interpretation (in Mandarin)
Regulations (in Mandarin)
U.S.: Oklahoma Decreases Financial Institutions Blacklist by More Than Half
On August 15, 2023, the Oklahoma State Treasurer’s Office released an updated list of the financial institutions banned from contracting with the state because they have been deemed to boycott fossil fuel companies, reducing the number of financial institutions on the list from 13 to six.
A blacklist of financial institutions that are deemed to boycott oil and gas companies is required to be maintained by the State Treasurer under the Energy Discrimination Elimination Act of 2022 (H.B. 2034). Following the enactment of the law, the State Treasurer sent a questionnaire to nearly 160 financial institutions, inquiring about their ESG policies with respect to the Energy Discrimination Elimination Act. Pursuant to the law, the list must be updated at least annually. Institutions that are placed on the blacklist have 90 days to cease the alleged boycotting to avoid potential divestment by the state.
The financial institutions removed from the list are GCM Grosvenor, Lexington Partners, FirstMark Fund Partners, Stepstone VC Global Partner, WCM Investment Management, William Blair, and Actis. The six firms still on the list are BlackRock, Wells Fargo, JPMorgan Chase, Bank of America, State Street, and Climate First Bank.
These 13 financial institutions were initially placed on the blacklist released in May 2023 because they were deemed to be boycotting oil and gas companies, either because they refused to do business with fossil fuel companies, or were presumed to boycott fossil fuel companies because they failed to respond to the State Treasurer’s initial questionnaire earlier this year.
List of Financial Institutions
State Treasurer’s Announcement
Europe: Norwegian Wealth Fund Increases Pressure on Companies to Improve Boardroom Diversity and Decrease Executive Pay
On August 18, 2023, Norges Bank Investment Management (“NBIM”) announced it would increase pressure on companies to improve gender diversity on boards and to reduce executive pay.
In its report on voting in the first half of 2023, NBIM highlighted its concern about
board gender diversity. Its target, announced in 2021, is for women to represent at least 30% of the board, though this target is adjusted where appropriate. For instance, NBIM expects at least one woman on the board of Japanese companies from 2023, rather than 30% representation. The report reveals that NBIM voted against companies on 2.7% of votes due to concerns regarding a lack of board gender diversity; this has grown from less than 0.5% of votes against companies in the first half of 2020. The report states that NBIM will continue to “raise [its] expectations of the companies most misaligned with [its gender diversity] position.”
NBIM supports simpler CEO pay package structures based on long-term ownership, as opposed to pay packages made up of a combination of cash salaries and short- and long-term cash- and share-based incentive schemes, which are released according to a set of complex criteria. In its report, NBIM stated that it analyzed all pay packages in the United States over $20 million, which led to it voting against the majority of pay packages at this level. Overall, NBIM voted against approximately 10% of CEO pay packages, with the most common reason for those votes being large one-off payments, such as “golden hellos.”
NBIM, with its $1.4 trillion of assets under management, is the world’s single largest stock market investor and holds stock in over 9,000 companies globally.
Norges Bank Investment Management – First half 2023 Report