S. Environmental / ESG Issues in Business Transactions and Corporate Decision-Making

For many years, environmental laws have had far-reaching consequences in the business world. Corporations incur enormous costs complying with environmental requirements, remediating contaminated properties, and defending "toxic tort" litigation (such as claims involving PFAS, the family of “forever chemicals”). Environmental liability and compliance costs frequently affect the ability of corporations to operate effectively and profitably, expand or modify operations, and meet financial projections. During the past several years, corporations and financial institutions have widened their focus beyond pure "environmental" risk to consider a wide range of "Environmental, Social, and Governance" (or ESG) issues (including, among other things, sustainability, climate, forced labor, supply chain resilience, workforce diversity, and impacts on vulnerable communities) that are in many ways redefining how we assess and measure corporate performance, "purpose," and value. ESG concerns, risks, and opportunities can affect stock value, access to capital, and institutional reputations, and are increasingly a key boardroom priority impacting corporate decision-making.

This seminar will explore how ESG and environmental concerns impact transactions (including mergers and acquisitions, securities offerings, lending and secured transactions, and real estate development) and corporate decision-making (across a range of industry sectors, from mining and heavy manufacturing to internet commerce). It will also examine how corporations and financial institutions are grappling with a myriad of ESG-related challenges, including among other things disclosure and reporting (focusing on current and anticipated US and EU requirements), data collection and verification, and investor and other stakeholder engagement.

During the semester, students will review and negotiate selected portions of operative contracts (e.g., asset and stock purchase agreements, credit agreements and lease agreements) derived from actual transactions, as well as securities offering disclosure language that complies (or fails to comply) with applicable SEC reporting rules. This seminar will also present students with a hypothetical transaction and business scenarios taken from real-life examples. Students will analyze, discuss, and prepare client advice notes regarding related tactics and strategies for addressing related environmental and other ESG risks and concerns. They will also have the opportunity to reflect upon the relative effectiveness of government enforcement authorities and markets as “ESG” regulators. At the end of the semester, students will participate in a mock negotiation exercise at the offices of Cravath, Swaine & Moore LLP to finalize the terms of the deal. There also will be occasional guest speakers on relevant topics.

Course grades will be based on homework assignments (10%); class participation, including class exercises and the mock transaction (30%); and an 8-hour take-home exam (60%).

The textbook for this class is "Environmental Aspects of Real Estate and Commercial Transactions: From Brownfields to Green Buildings, Fourth Edition," edited by James B. Witkin, ISBN 978-1-61632-911-2. Weekly readings from the textbook and other sources are assigned below. Discussion questions will accompany textbook readings and, for each class, pre-assigned students should be prepared to discuss them in class. The textbook will be supplemented by additional readings. All assignments should be handed in (hard copy or, preferably, electronic copy) prior to the start of class in which the assignment is due.