In light of two recent US court rulings, Jason Halper and Sara Bussiere from Cadwalader, Wickersham & Taft LLP discuss how boards of directors can avoid legal challenges to corporate decision-making where ESG issues are concerned.<\/p>\n\n\n\n\n\n
With the increasing politicisation of environmental, social and governance (ESG) issues in the USA, companies are facing pressure to publicly comment on ESG-related topics and impacts. Both Republican and Democratic politicians have publicly criticised corporate action in relation to a wide range of ESG issues, including fossil fuels, greenhouse gas (GHG) emissions, and workplace diversity and safety. Criticisms from both sides often focus on the board of director\u2019s discharge of fiduciary duties owed to the company\u2019s stockholders. Unsurprisingly, stockholders are vocalising concerns and demands about ESG-related corporate policies or actions too.<\/p>\n\n\n\n
This year, the Delaware Court of Chancery issued two noteworthy decisions addressing ESG-related issues. The court\u2019s rulings serve as helpful reminders that, when the legal issues are stripped of the \u201cweighty public policy questions surround[ing] the margins\u201d (Simeone v The Walt Disney Company (2023), the traditional pillars of strong corporate governance \u2013 namely, effective monitoring systems that ensure careful oversight and informed and conflict-free decision-making \u2013 can help boards fend off legal challenges to corporate decision-making involving ESG issues.<\/p>\n\n\n\n\n\n
In McDonald\u2019s, plaintiff stockholders of McDonald\u2019s Corporation asserted claims for breach of fiduciary duty against McDonald\u2019s, its board, and certain officers relating to an alleged \u201ccorporate culture\u201d that \u201ccondoned sexual harassment and misconduct\u201d. The court denied a motion to dismiss filed by one of the company\u2019s officer defendants, who served as the Global Chief People Officer with responsibility for \u201censuring\u201d that McDonald\u2019s \u201cprovided its employees with a safe and respectful workplace\u201d.<\/p>\n\n\n\n
The officer had argued that plaintiffs failed to state a claim against him because, among other reasons, the duty of oversight \u2013 an aspect of the duty of loyalty articulated in In re Caremark Int\u2019l Derivative Litigation (1996) \u2013 applies only to directors and not officers. Caremark established potential liability for directors for oversight failures where they did not implement (or monitor and take action based on information obtained from) internal control systems. In McDonald\u2019s, the court expressly recognised that officers likewise have oversight duties. <\/p>\n\n\n\n\n\n
Despite the fact that a Caremark claim is \u201cpossibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment\u201d, the court found plaintiffs sufficiently pled a Caremark violation against the former officer. This was because the complaint alleged that the officer knew about but consciously chose to ignore red flags \u201cindicating that sexual harassment occurred at the Company\u201d and personally \u201cengage[d] in acts of sexual harassment\u201d, thereby making it reasonable to infer that \u201cthe officer consciously ignored red flags about similar behaviour by others\u201d. <\/p>\n\n\n\n
In a separate decision, the court dismissed plaintiffs\u2019 Caremark claims against the McDonald\u2019s board of directors, finding that the plaintiffs\u2019 own allegations did not support a \u201cpleading-stage inference that the director defendants acted in bad faith\u201d. The court reasoned that, according to the complaint, the board \u201cengaged with the problem of sexual harassment and misconduct at the company\u201d by hiring outside consultants, amending relevant policies, implementing new training programmes, providing additional support to franchisees and taking other steps to \u201cestablish a renewed commitment to a safe and respectful workplace\u201d. The court explained that fiduciaries are not required to \u201cguarantee success\u201d but, rather, must \u201cmake a good faith effort\u201d.<\/p>\n\n\n\n\n\n
In Simeone, the court denied a stockholder\u2019s demand pursuant to Section 220 of the General Corporation Law of Delaware to inspect the books and records of The Walt Disney Company in order to investigate potential wrongdoing concerning Disney\u2019s response to Florida House Bill 1557 (\u201cHB 1557\u201d, the so-called \u201cDon\u2019t Say Gay\u201d bill), which \u201climits instruction on sexual orientation or gender identity in Florida classrooms\u201d. The plaintiff claimed that Disney\u2019s board breached its fiduciary duties in publicly opposing HB 1557 because it \u201ceither put their own beliefs ahead of their obligations to stockholders or flouted the risk of losing rights associated with the special district\u201d.<\/p>\n\n\n\n
After conducting trial on a paper record, the court held that the plaintiff failed to establish the requisite proper purpose to inspect the requested documents because there was no credible basis supporting potential mismanagement (eg, a conflict of interest, gross negligence, or bad faith). It found the plaintiff\u2019s complaints amounted to \u201ccritiquing a business decision\u201d.<\/p>\n\n\n\n\n\n
The court stated: \u201cThe plaintiff and his counsel may disagree with Disney\u2019s position on HB 1557[,] but their disagreement is not evidence of wrongdoing.\u201d It further recognised that \u201cstockholders invest with the understanding that the board is empowered to direct the corporation\u2019s affairs\u201d.<\/p>\n\n\n\n
Here, the court found that the board\u2019s response to HB 1557 was within the purview of its powers to direct Disney\u2019s affairs. In so finding, the court recognised that the board \u201cactively engaged in setting the tone for Disney\u2019s response to HB 1557\u201d, \u201cdid not abdicate its duties or allow management\u2019s personal views to dictate Disney\u2019s response to the legislation\u201d, and \u201cheld the sort of deliberations that a board should undertake when the corporation\u2019s voice is used on matters of social significance\u201d. Accordingly, the court denied the plaintiff additional access to Disney\u2019s books and records.<\/p>\n\n\n\n\n\n
These decisions serve as an important reminder to officers and directors of the importance of implementing internal controls and reporting systems \u2013 and taking action in response to \u201cred flags\u201d generated from those systems \u2013 so as to enable companies to adequately address material issues facing the company in a timely manner. McDonald\u2019s underscores that boards may avoid liability if they make a good faith effort to establish board-level monitoring systems and take prompt remedial action in response to relevant information, even if those actions ultimately prove insufficient to cure the problem.<\/p>\n\n\n\n
Relatedly, Simeone reinforces the well-established corporate principle that boards alone are responsible for setting corporate policies and that the decision to speak on public policy issues is an ordinary business decision that rests with the board, \u201ceven if the decision turned out poorly in hindsight\u201d. As ESG-related scrutiny from politicians, regulators, stockholders, and other stakeholders continues, boards should remain diligent in creating internal policies and systems that enable them to identify, monitor and \u2013 where necessary \u2013 address corporate risks and opportunities.<\/p>\n\n\n\n\n\n\n\n\n\n
<\/p>\n","protected":false},"featured_media":0,"template":"","meta":[],"publication":[],"locations":[],"blocks":[{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
In light of two recent US court rulings, Jason Halper and Sara Bussiere from Cadwalader, Wickersham & Taft LLP discuss how boards of directors can avoid legal challenges to corporate decision-making where ESG issues are concerned.<\/p>\n","innerContent":["\n
In light of two recent US court rulings, Jason Halper and Sara Bussiere from Cadwalader, Wickersham & Taft LLP discuss how boards of directors can avoid legal challenges to corporate decision-making where ESG issues are concerned.<\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"lazyblock\/chambers-media-list","attrs":{"media-list":"%5B%7B%22title%22:%22Jason%20Halper%22,%22image%22:%7B%22alt%22:%22Jason%20Halper,%20Cadwalader,%20Wickersham%20&%20Taft%20LLP,%20Chambers%20Expert%20Focus%20series%20contributor%22,%22title%22:%22Jason%20Halper%20circ%22,%22caption%22:%22%22,%22description%22:%22%22,%22id%22:17695,%22link%22:%22https:\/\/wpcms.chambers.com\/?attachment_id=17695%22,%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/02143748\/J-Halper-circ.png%22,%22sizes%22:%7B%22thumbnail%22:%7B%22height%22:120,%22width%22:120,%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/02143748\/J-Halper-circ-120x120.png%22,%22orientation%22:%22landscape%22%7D,%22medium%22:%7B%22height%22:300,%22width%22:300,%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/02143748\/J-Halper-circ-300x300.png%22,%22orientation%22:%22landscape%22%7D,%22full%22:%7B%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/02143748\/J-Halper-circ.png%22,%22height%22:602,%22width%22:602,%22orientation%22:%22landscape%22%7D%7D%7D,%22content%22:%22Ranked%20in%201%20practice%20area%20in%20Chambers%20USA%22,%22buttonName%22:%22View%20profile%22,%22buttonUrl%22:%22https:\/\/chambers.com\/lawyer\/jason-m-halper-usa-5:589156%22%7D,%7B%22title%22:%22Sara%20Bussiere%22,%22image%22:%7B%22alt%22:%22Sara%20Bussiere,%20Cadwalader,%20Wickersham%20&%20Taft%20LLP,%20Chambers%20Expert%20Focus%20contributor%22,%22title%22:%22Sara%20Bussiere%20circle%22,%22caption%22:%22%22,%22description%22:%22%22,%22id%22:19945,%22link%22:%22https:\/\/wpcms.chambers.com\/legal-trends\/boards-of-directors-role-in-decision-making-with-sustainability-issues\/sara-bussiere-circle\/%22,%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/26123539\/Sara-Bussiere-circle.jpg%22,%22sizes%22:%7B%22thumbnail%22:%7B%22height%22:120,%22width%22:120,%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/26123539\/Sara-Bussiere-circle-120x120.jpg%22,%22orientation%22:%22landscape%22%7D,%22medium%22:%7B%22height%22:300,%22width%22:300,%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/26123539\/Sara-Bussiere-circle-300x300.jpg%22,%22orientation%22:%22landscape%22%7D,%22full%22:%7B%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/26123539\/Sara-Bussiere-circle.jpg%22,%22height%22:618,%22width%22:618,%22orientation%22:%22landscape%22%7D%7D%7D,%22buttonName%22:%22View%20firm%20profile%22,%22content%22:%22%22,%22buttonUrl%22:%22https:\/\/chambers.com\/law-firm\/cadwalader-wickersham-taft-llp-usa-5:3518%22%7D%5D","blockId":"1yh9gY","blockUniqueClass":"lazyblock-chambers-media-list-1yh9gY"},"innerBlocks":[],"innerHTML":"","innerContent":[]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
With the increasing politicisation of environmental, social and governance (ESG) issues in the USA, companies are facing pressure to publicly comment on ESG-related topics and impacts. Both Republican and Democratic politicians have publicly criticised corporate action in relation to a wide range of ESG issues, including fossil fuels, greenhouse gas (GHG) emissions, and workplace diversity and safety. Criticisms from both sides often focus on the board of director\u2019s discharge of fiduciary duties owed to the company\u2019s stockholders. Unsurprisingly, stockholders are vocalising concerns and demands about ESG-related corporate policies or actions too.<\/p>\n","innerContent":["\n
With the increasing politicisation of environmental, social and governance (ESG) issues in the USA, companies are facing pressure to publicly comment on ESG-related topics and impacts. Both Republican and Democratic politicians have publicly criticised corporate action in relation to a wide range of ESG issues, including fossil fuels, greenhouse gas (GHG) emissions, and workplace diversity and safety. Criticisms from both sides often focus on the board of director\u2019s discharge of fiduciary duties owed to the company\u2019s stockholders. Unsurprisingly, stockholders are vocalising concerns and demands about ESG-related corporate policies or actions too.<\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
This year, the Delaware Court of Chancery issued two noteworthy decisions addressing ESG-related issues. The court\u2019s rulings serve as helpful reminders that, when the legal issues are stripped of the \u201cweighty public policy questions surround[ing] the margins\u201d (Simeone v The Walt Disney Company (2023), the traditional pillars of strong corporate governance \u2013 namely, effective monitoring systems that ensure careful oversight and informed and conflict-free decision-making \u2013 can help boards fend off legal challenges to corporate decision-making involving ESG issues.<\/p>\n","innerContent":["\n
This year, the Delaware Court of Chancery issued two noteworthy decisions addressing ESG-related issues. The court\u2019s rulings serve as helpful reminders that, when the legal issues are stripped of the \u201cweighty public policy questions surround[ing] the margins\u201d (Simeone v The Walt Disney Company (2023), the traditional pillars of strong corporate governance \u2013 namely, effective monitoring systems that ensure careful oversight and informed and conflict-free decision-making \u2013 can help boards fend off legal challenges to corporate decision-making involving ESG issues.<\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"lazyblock\/chambers-header","attrs":{"header":"In re McDonald\u2019s Corporation Stockholder Derivative Litigation (2023)","headerLevel":"2","blockId":"2oF5YY","blockUniqueClass":"lazyblock-chambers-header-2oF5YY"},"innerBlocks":[],"innerHTML":"","innerContent":[]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
In McDonald\u2019s, plaintiff stockholders of McDonald\u2019s Corporation asserted claims for breach of fiduciary duty against McDonald\u2019s, its board, and certain officers relating to an alleged \u201ccorporate culture\u201d that \u201ccondoned sexual harassment and misconduct\u201d. The court denied a motion to dismiss filed by one of the company\u2019s officer defendants, who served as the Global Chief People Officer with responsibility for \u201censuring\u201d that McDonald\u2019s \u201cprovided its employees with a safe and respectful workplace\u201d.<\/p>\n","innerContent":["\n
In McDonald\u2019s, plaintiff stockholders of McDonald\u2019s Corporation asserted claims for breach of fiduciary duty against McDonald\u2019s, its board, and certain officers relating to an alleged \u201ccorporate culture\u201d that \u201ccondoned sexual harassment and misconduct\u201d. The court denied a motion to dismiss filed by one of the company\u2019s officer defendants, who served as the Global Chief People Officer with responsibility for \u201censuring\u201d that McDonald\u2019s \u201cprovided its employees with a safe and respectful workplace\u201d.<\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
The officer had argued that plaintiffs failed to state a claim against him because, among other reasons, the duty of oversight \u2013 an aspect of the duty of loyalty articulated in In re Caremark Int\u2019l Derivative Litigation (1996) \u2013 applies only to directors and not officers. Caremark established potential liability for directors for oversight failures where they did not implement (or monitor and take action based on information obtained from) internal control systems. In McDonald\u2019s, the court expressly recognised that officers likewise have oversight duties. <\/p>\n","innerContent":["\n
The officer had argued that plaintiffs failed to state a claim against him because, among other reasons, the duty of oversight \u2013 an aspect of the duty of loyalty articulated in In re Caremark Int\u2019l Derivative Litigation (1996) \u2013 applies only to directors and not officers. Caremark established potential liability for directors for oversight failures where they did not implement (or monitor and take action based on information obtained from) internal control systems. In McDonald\u2019s, the court expressly recognised that officers likewise have oversight duties. <\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"lazyblock\/chambers-quote","attrs":{"quote":"
\u201cMcDonald\u2019s Corporation Stockholder Derivative Litigation (2023) underscores that boards may avoid liability if they take prompt remedial action in response to relevant information, even if it ultimately proves insufficient to cure the problem.\u201d<\/p>","blockId":"ZyQ9Eq","blockUniqueClass":"lazyblock-chambers-quote-ZyQ9Eq"},"innerBlocks":[],"innerHTML":"","innerContent":[]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
Despite the fact that a Caremark claim is \u201cpossibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment\u201d, the court found plaintiffs sufficiently pled a Caremark violation against the former officer. This was because the complaint alleged that the officer knew about but consciously chose to ignore red flags \u201cindicating that sexual harassment occurred at the Company\u201d and personally \u201cengage[d] in acts of sexual harassment\u201d, thereby making it reasonable to infer that \u201cthe officer consciously ignored red flags about similar behaviour by others\u201d. <\/p>\n","innerContent":["\n
Despite the fact that a Caremark claim is \u201cpossibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment\u201d, the court found plaintiffs sufficiently pled a Caremark violation against the former officer. This was because the complaint alleged that the officer knew about but consciously chose to ignore red flags \u201cindicating that sexual harassment occurred at the Company\u201d and personally \u201cengage[d] in acts of sexual harassment\u201d, thereby making it reasonable to infer that \u201cthe officer consciously ignored red flags about similar behaviour by others\u201d. <\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
In a separate decision, the court dismissed plaintiffs\u2019 Caremark claims against the McDonald\u2019s board of directors, finding that the plaintiffs\u2019 own allegations did not support a \u201cpleading-stage inference that the director defendants acted in bad faith\u201d. The court reasoned that, according to the complaint, the board \u201cengaged with the problem of sexual harassment and misconduct at the company\u201d by hiring outside consultants, amending relevant policies, implementing new training programmes, providing additional support to franchisees and taking other steps to \u201cestablish a renewed commitment to a safe and respectful workplace\u201d. The court explained that fiduciaries are not required to \u201cguarantee success\u201d but, rather, must \u201cmake a good faith effort\u201d.<\/p>\n","innerContent":["\n
In a separate decision, the court dismissed plaintiffs\u2019 Caremark claims against the McDonald\u2019s board of directors, finding that the plaintiffs\u2019 own allegations did not support a \u201cpleading-stage inference that the director defendants acted in bad faith\u201d. The court reasoned that, according to the complaint, the board \u201cengaged with the problem of sexual harassment and misconduct at the company\u201d by hiring outside consultants, amending relevant policies, implementing new training programmes, providing additional support to franchisees and taking other steps to \u201cestablish a renewed commitment to a safe and respectful workplace\u201d. The court explained that fiduciaries are not required to \u201cguarantee success\u201d but, rather, must \u201cmake a good faith effort\u201d.<\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"lazyblock\/chambers-header","attrs":{"header":"Simeone v The Walt Disney Company (2023) ","headerLevel":"2","blockId":"2aWX7j","blockUniqueClass":"lazyblock-chambers-header-2aWX7j"},"innerBlocks":[],"innerHTML":"","innerContent":[]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
In Simeone, the court denied a stockholder\u2019s demand pursuant to Section 220 of the General Corporation Law of Delaware to inspect the books and records of The Walt Disney Company in order to investigate potential wrongdoing concerning Disney\u2019s response to Florida House Bill 1557 (\u201cHB 1557\u201d, the so-called \u201cDon\u2019t Say Gay\u201d bill), which \u201climits instruction on sexual orientation or gender identity in Florida classrooms\u201d. The plaintiff claimed that Disney\u2019s board breached its fiduciary duties in publicly opposing HB 1557 because it \u201ceither put their own beliefs ahead of their obligations to stockholders or flouted the risk of losing rights associated with the special district\u201d.<\/p>\n","innerContent":["\n
In Simeone, the court denied a stockholder\u2019s demand pursuant to Section 220 of the General Corporation Law of Delaware to inspect the books and records of The Walt Disney Company in order to investigate potential wrongdoing concerning Disney\u2019s response to Florida House Bill 1557 (\u201cHB 1557\u201d, the so-called \u201cDon\u2019t Say Gay\u201d bill), which \u201climits instruction on sexual orientation or gender identity in Florida classrooms\u201d. The plaintiff claimed that Disney\u2019s board breached its fiduciary duties in publicly opposing HB 1557 because it \u201ceither put their own beliefs ahead of their obligations to stockholders or flouted the risk of losing rights associated with the special district\u201d.<\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
After conducting trial on a paper record, the court held that the plaintiff failed to establish the requisite proper purpose to inspect the requested documents because there was no credible basis supporting potential mismanagement (eg, a conflict of interest, gross negligence, or bad faith). It found the plaintiff\u2019s complaints amounted to \u201ccritiquing a business decision\u201d.<\/p>\n","innerContent":["\n
After conducting trial on a paper record, the court held that the plaintiff failed to establish the requisite proper purpose to inspect the requested documents because there was no credible basis supporting potential mismanagement (eg, a conflict of interest, gross negligence, or bad faith). It found the plaintiff\u2019s complaints amounted to \u201ccritiquing a business decision\u201d.<\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"lazyblock\/chambers-quote","attrs":{"quote":"
\u201cSimeone v The Walt Disney Company (2023) reinforces the well-established corporate principle that boards alone are responsible for setting corporate policies.\u201d<\/p>","blockId":"1KYd0B","blockUniqueClass":"lazyblock-chambers-quote-1KYd0B"},"innerBlocks":[],"innerHTML":"","innerContent":[]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
The court stated: \u201cThe plaintiff and his counsel may disagree with Disney\u2019s position on HB 1557[,] but their disagreement is not evidence of wrongdoing.\u201d It further recognised that \u201cstockholders invest with the understanding that the board is empowered to direct the corporation\u2019s affairs\u201d.<\/p>\n","innerContent":["\n
The court stated: \u201cThe plaintiff and his counsel may disagree with Disney\u2019s position on HB 1557[,] but their disagreement is not evidence of wrongdoing.\u201d It further recognised that \u201cstockholders invest with the understanding that the board is empowered to direct the corporation\u2019s affairs\u201d.<\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
Here, the court found that the board\u2019s response to HB 1557 was within the purview of its powers to direct Disney\u2019s affairs. In so finding, the court recognised that the board \u201cactively engaged in setting the tone for Disney\u2019s response to HB 1557\u201d, \u201cdid not abdicate its duties or allow management\u2019s personal views to dictate Disney\u2019s response to the legislation\u201d, and \u201cheld the sort of deliberations that a board should undertake when the corporation\u2019s voice is used on matters of social significance\u201d. Accordingly, the court denied the plaintiff additional access to Disney\u2019s books and records.<\/p>\n","innerContent":["\n
Here, the court found that the board\u2019s response to HB 1557 was within the purview of its powers to direct Disney\u2019s affairs. In so finding, the court recognised that the board \u201cactively engaged in setting the tone for Disney\u2019s response to HB 1557\u201d, \u201cdid not abdicate its duties or allow management\u2019s personal views to dictate Disney\u2019s response to the legislation\u201d, and \u201cheld the sort of deliberations that a board should undertake when the corporation\u2019s voice is used on matters of social significance\u201d. Accordingly, the court denied the plaintiff additional access to Disney\u2019s books and records.<\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"lazyblock\/chambers-header","attrs":{"header":"Conclusion","headerLevel":"2","blockId":"ZAEzA3","blockUniqueClass":"lazyblock-chambers-header-ZAEzA3"},"innerBlocks":[],"innerHTML":"","innerContent":[]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
These decisions serve as an important reminder to officers and directors of the importance of implementing internal controls and reporting systems \u2013 and taking action in response to \u201cred flags\u201d generated from those systems \u2013 so as to enable companies to adequately address material issues facing the company in a timely manner. McDonald\u2019s underscores that boards may avoid liability if they make a good faith effort to establish board-level monitoring systems and take prompt remedial action in response to relevant information, even if those actions ultimately prove insufficient to cure the problem.<\/p>\n","innerContent":["\n
These decisions serve as an important reminder to officers and directors of the importance of implementing internal controls and reporting systems \u2013 and taking action in response to \u201cred flags\u201d generated from those systems \u2013 so as to enable companies to adequately address material issues facing the company in a timely manner. McDonald\u2019s underscores that boards may avoid liability if they make a good faith effort to establish board-level monitoring systems and take prompt remedial action in response to relevant information, even if those actions ultimately prove insufficient to cure the problem.<\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
Relatedly, Simeone reinforces the well-established corporate principle that boards alone are responsible for setting corporate policies and that the decision to speak on public policy issues is an ordinary business decision that rests with the board, \u201ceven if the decision turned out poorly in hindsight\u201d. As ESG-related scrutiny from politicians, regulators, stockholders, and other stakeholders continues, boards should remain diligent in creating internal policies and systems that enable them to identify, monitor and \u2013 where necessary \u2013 address corporate risks and opportunities.<\/p>\n","innerContent":["\n
Relatedly, Simeone reinforces the well-established corporate principle that boards alone are responsible for setting corporate policies and that the decision to speak on public policy issues is an ordinary business decision that rests with the board, \u201ceven if the decision turned out poorly in hindsight\u201d. As ESG-related scrutiny from politicians, regulators, stockholders, and other stakeholders continues, boards should remain diligent in creating internal policies and systems that enable them to identify, monitor and \u2013 where necessary \u2013 address corporate risks and opportunities.<\/p>\n"]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"lazyblock\/chambers-header","attrs":{"header":"Cadwalader, Wickersham & Taft LLP","headerLevel":"3","blockId":"Z2llgjW","blockUniqueClass":"lazyblock-chambers-header-Z2llgjW"},"innerBlocks":[],"innerHTML":"","innerContent":[]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"lazyblock\/chambers-media-list","attrs":{"media-list":"%5B%7B%22image%22:%7B%22alt%22:%22Cadwalader,%20Wickersham%20&%20Taft%20LLP%20law%20firm%20logo%22,%22title%22:%22Cadwalader,%20Wickersham%20&%20Taft%20LLP%20law%20firm%20logo%22,%22caption%22:%22%22,%22description%22:%22%22,%22id%22:17696,%22link%22:%22https:\/\/wpcms.chambers.com\/?attachment_id=17696%22,%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/02150746\/Cadwalader-Wickersham-Taft-LLP-law-firm-logo.png%22,%22sizes%22:%7B%22thumbnail%22:%7B%22height%22:120,%22width%22:120,%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/02150746\/Cadwalader-Wickersham-Taft-LLP-law-firm-logo-120x120.png%22,%22orientation%22:%22landscape%22%7D,%22medium%22:%7B%22height%22:17,%22width%22:300,%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/02150746\/Cadwalader-Wickersham-Taft-LLP-law-firm-logo-300x17.png%22,%22orientation%22:%22landscape%22%7D,%22large%22:%7B%22height%22:59,%22width%22:1024,%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/02150746\/Cadwalader-Wickersham-Taft-LLP-law-firm-logo-1024x59.png%22,%22orientation%22:%22landscape%22%7D,%22full%22:%7B%22url%22:%22https:\/\/assets.chambers.com\/wp-content\/uploads\/2023\/10\/02150746\/Cadwalader-Wickersham-Taft-LLP-law-firm-logo.png%22,%22height%22:123,%22width%22:2141,%22orientation%22:%22landscape%22%7D%7D%7D,%22title%22:%2220%20ranked%20departments%20and%2030%20ranked%20lawyers%20in%20Chambers%20USA%22,%22content%22:%22Learn%20more%20about%20the%20firm%E2%80%99s%20ranking%20in%20Chambers%20USA%22,%22buttonName%22:%22View%20firm%22,%22buttonUrl%22:%22https:\/\/chambers.com\/law-firm\/cadwalader-wickersham-taft-llp-usa-5:3518%22%7D%5D","blockId":"3aEQE","blockUniqueClass":"lazyblock-chambers-media-list-3aEQE"},"innerBlocks":[],"innerHTML":"","innerContent":[]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"lazyblock\/promo-block","attrs":{"title":"Chambers In Focus Newsletter","content":"Sign up for our newsletter and never miss out on thought leadership content from legal experts and the key stories driving the legal profession forward.","button-title":"Sign up here","button-url":"https:\/\/crm.chambers.com\/l\/854103\/2023-07-05\/h7hd2","blockId":"1UrvLh","blockUniqueClass":"lazyblock-promo-block-1UrvLh"},"innerBlocks":[],"innerHTML":"","innerContent":[]},{"blockName":null,"attrs":[],"innerBlocks":[],"innerHTML":"\n\n","innerContent":["\n\n"]},{"blockName":"core\/paragraph","attrs":[],"innerBlocks":[],"innerHTML":"\n
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