ACR Brief: Where the Rubber Meets the ESG Road
March 09, 2022

ACR Brief: Where the Rubber Meets the ESG Road
Environmental, social and governance (ESG) considerations have been top of mind for many in the compliance and ethics space for the past several years, but the shocking global events of the past two weeks have thrown ESG into a stark new light. A bewildering number of changes to sanctions regimes sent companies scrambling to determine the ways in which their business must change to comply, but some companies are more focused on what they should change. Even without government requirements to change their business relationships with Russia and Ukraine, some companies are focusing on the “S” in ESG and cutting ties with Russia preemptively in the name of social good and risk management. Last week, at the ABA’s 37th National Institute on White Collar Crime held in San Francisco, California, the general counsels of two major companies discussed how they are thinking through these decisions.

Eric Lardiere, senior vice president, general counsel and secretary of Meggitt-USA, Inc., an aerospace and defense company, said he had been surprised by the response from his company’s leadership. “My initial reaction was, let’s just follow along, whatever the government says … let’s just do what they say to do,” he said, but company leadership was “more forward leaning,” and decided to suspend all business in Russia. When there is a “rogue leader like Russia has, this kind of sharp response by the free world, by the entire world, is necessary,” he said.

Mike Holston, senior vice president, general counsel and secretary of GE, suggested that general counsels and legal departments play a critical role in making these kinds of decisions. He reported that GE had shut down all aviation business in Russia and was working through how to handle its health care business there. For this kind of issue, “the general counsel is usually the hub,” coordinating among the financial teams determining whether this is a material change that needs to be reported, the safety and HR teams looking after people on the ground, and the communications people determining what will be said both inside and outside the company, he explained.

Russia has been a perennially challenging jurisdiction when it comes to anti-corruption compliance. We at the Anti-Corruption Report will continue to monitor the situation in Ukraine, particularly the sanctions, supply chain and ESG implications. We would love to hear how your company and clients are reacting to current events and what issues are top of mind for you. You can reach me via email or LinkedIn anytime.

Warmly,
Megan Zwiebel
Senior Editor
 
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