Behind Ballard Spahr’s New Social Issues Working Group
For many companies, diversity initiatives have been largely voluntary. But that may be changing, at least for some publicly traded firms.
Early last month, Nasdaq announced a new proposal that would require companies trading on its exchange to publicly disclose the racial makeup of their boards, as well as board members’ gender identity and sexual orientation. The proposal, if approved by the Securities and Exchange Commission, would also require companies to have at least two “diverse” directors: In this case, one female director and another director who identifies as a minority or member of the LGBTQ community.
“Various stakeholders, including Nasdaq, believe that clear and concise annual disclosure of board diversity information that disaggregates the data by race, ethnicity, gender identity, and sexual orientation will provide the public, including key stakeholders, with a better sense of a company’s approach to improving corporate diversity and the support needed to effectuate any changes,” Nasdaq officials wrote in a filing with the SEC.
Whether the rule ultimately gets the SEC’s blessing, companies still need to be prepared to answer more questions about their diversity practices.
That’s part of the reason national law firm Ballard Spahr LLP has formed a new working group to help prepare clients for a changing world. And it’s not just diversity; the group also tackles sustainability and environmental issues.
April Hamlin, a Minneapolis attorney who serves as co-lead of the “environmental, social, and governance” (ESG) working group, says the firm has worked on these issues for years now, but has only recently decided to formalize the effort.
“What we realized, kind of around the time that Nasdaq issued its new rules about board diversity, is there was this umbrella term, ESG, that we could and should be using to organize our efforts,” says Hamlin, who works out of the firm’s Minneapolis office. “For us, it’s not something new, really.”
For her part, Hamlin notes that she’s been working on ESG-related topics her entire career. But the pandemic, coupled with a renewed push for racial equity, brought these issues to the forefront.
“A lot of people have been doing one or more elements of ESG for quite some time, but now, it seems like there’s this confluence of forces that are bringing this to prominence in people’s business lives,” she says.
Kahil Williams, another Ballard Spahr attorney, will co-lead the ESG group from Philadelphia.
Hamlin, who’s been practicing law since 1999, says it will soon become commonplace for companies to fold ESG-related initiatives into their broader business strategies.
“It kind of reminds me of the dot-com days,” Hamlin says. “Everybody had an internet strategy. But now, it’s just so ubiquitous. Every company has a website. You see that in ESG, as well. It’s this thing everybody is struggling to figure out right now, but in a few years, it’s just going to be a regular part of the decision-making process.”
Ballard Spahr’s ESG group is aimed at helping clients “navigate a fast-changing ESG landscape,” according to the firm’s website. That includes helping companies understand new disclosure requirements — such as the Nasdaq’s proposed rule — and the legal ramifications of diversity and inclusion initiatives.
To be sure, other firms are and have been working on ESG-related topics, whether they explicitly call it out or not. Frederikson & Byron, another Minneapolis law firm, takes on ESG issues under its “corporate sustainability and social responsibility” group.
In Hamlin’s view, companies soon won’t be able to afford to overlook the topic; ESG issues have already reshaped many areas of business, and they’ll continue to.
“In a few years, shoppers will shop that way. Investors will invest that way. Employers will recruit that way,” she says. “It’s just going to be a decision-making factor that people use for everything.”