Debevoise special counsel Simon Witney, with the assistance of the wider Debevoise team, has authored a new legal memo for the Principles of Responsible Investment (“PRI”) on the duties of company directors who sit on private equity-backed portfolio company boards to consider the environmental, social and governance (“ESG”) risks and opportunities those companies face.
The memorandum is specifically focused on the duties of UK company directors. The PRI has commissioned a follow-up note on the duties of US company directors.
The memorandum concludes that the legal duties imposed on UK company directors require them, when exercising their powers, to understand and anticipate relevant risks to, and opportunities for, the company, including those related to ESG factors. Directors should therefore ensure that their company has processes to identify, manage and mitigate or exploit those risks and opportunities.
A copy of the memo can be found here. The PRI has produced accompanying guidance to explain its implications for its private equity signatories, and to recommend actions that can be promoted to underlying portfolio company boards.
Fiona Reynolds, CEO of the PRI: “A company’s board of directors is a crucial lever for transformation and adaptation. As our private equity signatories look to integrate ESG considerations into all aspects of the investment process, they utilise their engagement with company boards to drive effective oversight of ESG risks and strategic planning for ESG opportunities. This guidance proposes a way to systematise that governance mechanism to ensure that our private equity signatories and their underlying investee boards are aware of their legal duties to have regard to ESG factors.”
About the PRI
The PRI is the world’s leading proponent of responsible investment. It works to understand the investment implications of ESG factors, and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions. The PRI encourages
investors to use responsible investment to enhance returns and better manage risks, but does not operate for its own profit. It also engages with global policymakers, but is not associated with any government. It is supported by, but not part of, the United Nations.
About Debevoise & Plimpton
Debevoise’s Private Equity Group is one of the most respected in the field. With consistently high rankings from Chambers Global, The Legal 500 and PEI year after year, the group has been a recognized leader for more than 35 years. It’s regulatory capability is one of its defining characteristics. Lawyers working in the group possess in-depth experience managing regulatory environments in North America, Europe and Asia, providing practical advice to private equity firms on the nuances of regulation in virtually every corner of the globe.
Debevoise & Plimpton LLP is a premier law firm with market-leading practices, a global perspective and strong New York roots. We deliver effective solutions to our clients’ most important legal challenges, applying clear commercial judgment and a distinctively collaborative approach.