ESG Global Vision

Corporate governance policy, social policy

In force

Private sector employers, with limited exceptions, as well as some federal and state employees.  “Employer” is defined by the Act as any “person engaged in a business affecting commerce who has employees, but does not include the United States or any state or political subdivision of a state”.

The OSHA is the primary federal law governing workplace health and safety.

Alongside more specific and targeted regulations, it imposes a duty on employers to provide workplaces that are free from known dangers to employees.  This duty is set out in broad terms in the “general duty clause” in section 5 of the OSHA.  Under this clause, employers are required to:

1. furnish employees with an environment that is “free from recognized hazards that are causing or are likely to cause death or serious physical harm to [their] employees”; and
2. “comply with occupational safety and health standards promulgated under this Act”.

Employees are required to “comply with occupational safety and healthy standards and all rules, regulations, and orders issued pursuant to this Act which are applicable to [their] own actions and conduct.”

Amongst other things, employers are required to apprise workers of relevant hazards to retain records of work-related injuries and illnesses, perform air sampling tests, and not to discharge, retaliate or discriminate against workers that report work-related injuries or illnesses.

The Act also created the Occupational Safety and Health Administration (amongst other bodies), which sets and enforces the standards set by OSHA, and provides training and assistance to employers and employees to assist with the maintenance of the same. 

Penalties

Penalties for breach of the OSHA can reach up to USD 161,323 per violation, for “wilful or repeated” failings.

Corporate governance policy, social policy

In force

All mine operators and miners throughout the United States and overseas territories.

The Mine Act was brought into force in response to a number of high profile disasters and deaths in the US mining industry.  It’s stated aim is to protect the health and safety of miners in the coal, metal, and non-metal industries by establishing mandatory safety and health standards, requiring routine inspections of mines, enhancing miner protection from employer retaliation and establishing mandatory training requirements.

The Mine Act granted enforcement responsibilities to the Department of Labor and created the Mine Safety and Health Administration, which oversees regulation of mines and employers in the industry.

Corporate governance policy, social policy

In force

Private sector employees.  The NLRA does not apply to federal workers, nor does it apply to independent contractors, domestic workers, and agricultural workers. 

The NLRA is the foundational statute of US labour law designed to protect the rights of employees in the workplace.  It guarantees a number of key workplace rights, including but not limited to:

1. the right to organise into trade unions;
2. the right to not be discriminated against for raising complaints or issues;
3. the right to engage in collective bargaining; and
4. the right to take collective action, such as strikes and walkouts.

The NLRA created the National Labor Relations Board (the “NLRB”) which acts as an overseer, adjudicator, and enforcer with respect to violations of the NLRA.  It is able to create rules with respect to its interpretation of the underlying legislation, which are binding should they not be challenged in the courts.

Penalties and enforcement

The NLRB is empowered to lead investigations into unfair labour practices, issue subpoenas, and adjudicate on disputes.  The NLRB is not empowered to issue penalties or fines, and can either seek redress through the courts, or through an NLRB adjudicated settlement process. 

For more information, see here.

Corporate governance policy, social policy

In force

Employers whose annual sales total $500,000 or more or who are engaged in interstate commerce

The FLSA establishes minimum wage, overtime pay, recordkeeping and youth employment standards affecting employees in the private sector and in federal, state and local governments. Workers covered by the FLSA are entitled to a minimum wage of $7.25 an hour, and overtime pay at a rate of one and one-half times the regular rate.

Most states and some cities in the US also have their own analogous laws.  These state and local laws often provide greater protections for employees than the FLSA does. For example, state and local minimum wage rates may be higher than the federal minimum wage rate, such as in New York City where the minimum wage is $15 per hour.

Law: 29 USC Ch. 8: FAIR LABOR STANDARDS (house.gov)

Regulations: eCFR :: 29 CFR Chapter V -- Wage and Hour Division, Department of Labor

Corporate governance policy, social policy

In force

Employers covered by the FLSA.

EPA amends the FLSA and prohibits wage discrimination based on sex. States and localities have civil rights laws, human rights laws or labour laws which prohibit wage discrimination based on sex.

Corporate governance policy, social policy

In force

Employers with 15 or more employees and their agents

Title VII prohibits employment discrimination against individuals based on their race, colour, national origin, religion and sex (including gender, pregnancy, sexual orientation and gender identity). State and local jurisdictions have enacted similar laws affording the same or more protections. Most states and localities have their own civil rights or human rights laws that protect the same or more characteristics. For example, New York State and New York City each have a distinct Human Rights Law which provide greater protection against discrimination, harassment and retaliation than Title VII does.

Corporate governance policy, social policy

In force

Employers with 15 or more employees

The ADA prohibits employment discrimination against qualified individuals with a disability and/or individuals perceived as having a disability. In addition, the ADA requires employers to reasonably accommodate such individuals so that they may meet the basic job requirements of their role, unless the employer can show that providing a reasonable accommodation would cause an undue hardship.

Many states and localities have analogous or more enhanced protections for individuals with disabilities in their civil rights or human rights laws.

Law: Americans with Disabilities Act of 1990, As Amended | ADA.gov

Title II Regulations: Americans with Disabilities Act Title II Regulations | ADA.gov

Title III Regulations: Americans with Disabilities Act Title III Regulations | ADA.gov

Corporate governance policy, social policy

In force

Private, federal, state, and local employers with at least 20 employees

The ADEA prohibits discrimination against employees and applicants aged 40 and older and imposes specific requirements on employers entering into separation agreements with older workers. Many states and localities have analogous or more enhanced protections against age discrimination in their civil rights or human rights laws.

Corporate governance policy, social policy

In force

Employers with at least 50 employees

The FMLA requires employers to provide employees with up to 12 weeks unpaid job-protected leave during a 12 month period for a qualifying reason, such as the birth and care of a newborn, placement of an adopted or foster child with the employee, care of an immediate family member with a serious health condition, and the employee’s own serious health condition.

Many states and localities have enacted their own family leave laws offering similar or better benefits.  For example, in New York, employees may be eligible for paid parental leave pursuant to the New York State Paid Family Leave Law.

Law: 29 USC Ch. 28: FAMILY AND MEDICAL LEAVE (house.gov)

Regulations: eCFR :: 29 CFR Part 825 -- The Family and Medical Leave Act of 1993

Corporate governance policy

In focus

Employers with 100 or more full-time employees

WARN requires employers to provide 60 days’ advance notice in the event of a plant closing or a mass layoff. Many state and localities have enacted their own mini-WARN laws that require greater advance notice, among other things.

Law: 29 USC Ch. 23: WORKER ADJUSTMENT AND RETRAINING NOTIFICATION (house.gov)

Regulations: eCFR :: 20 CFR Part 639 -- Worker Adjustment and Retraining Notification

Environmental policy, non-financial reporting

In force

Any individual or company discharging pollutants into the waters of the USA.

The CWA is the primary federal law governing water pollution, and establishes a structure to regulate and prevent the discharge of pollutants into the waters of the United States (“WOTUS”). The definition of WOTUS was recently addressed by the US Supreme Court (see here), which defined WOTUS as all waters with "a continuous surface connection" to "navigable waters".

The stated aim of the CWA is to “restore and maintain the chemical, physical, and biological integrity of the nation's waters”, including working with states to address their responsibilities, as well as providing funding and guidance to address issues such as the treatment of wastewater, the discharge of pollutants into water bodies, and the maintenance of protected bodies of water, such as wetlands.

The CWA provides for the implementation of pollution control programs by the Environmental Protection Agency (“EPA”), and its administration is carried out by the EPA.  This includes the National Pollutant Discharge Elimination System (“NPDES”) permit program that allows for certain discharges of pollutants into navigable waters. Under the CWA, the EPA also conducts compliance management of municipal wastewater and stormwater as well as discharges from Concentrated Animal Feeding Operations (“CAFO”).

Under s. 309 of the CWA, the EPA is empowered to seek civil or criminal penalties against individuals/entities/authorities in violation of the provisions of the CPA, alongside the ability to impose fines for breaches of up to USD 1m.

Environmental policy, non-financial reporting

In force

States, polluting entities, and individuals caught by the scope of the Act.

The Clean Air Act (“CAA”) is the primary federal air quality law in the USA, and is designed to preserve and enhance the nation’s air quality, and to prevent the emission and creation of harmful air pollutants that may be damaging to human health and/or the environment more generally. 

The CAA is an umbrella law, that requires that the Environmental Protection Agency (“EPA”) (and a number of agencies with more minor roles) to implement a number of regulatory programmes, aimed at meeting the key goals of the CAA.  The major programmes are listed below (this list is subject to update, and for brevity’s sake does not include a number of important programmes, such as ozone protection, fuel controls, and interstate pollution control):

1. National Ambient Air Quality Standards (“NAAQS”). The NAAQS set out maximum permissible levels of various pollutants in the atmosphere, principally comprising those hazardous to humans, such as carbon monoxide, lead, particulate matter, and sulphur dioxide.  These standards are frequently updated and revised, either as requirements change or as technological or scientific understanding moves.  They are implemented at the state level, with the states and the EPA working to identify “attainment” and “non-attainment” areas, and to address the causes of “non-attainment” areas failing to meet the required standards. 
2. National Emissions Standards for Hazardous Air Pollutants (“NESHAPs”). The NESHAPs are a set of standards operating on the same basis as the NAAQS, but covering a wider set of rarer pollutants (for example, phosphine, hydrochloric acid, asbestos) that pose a direct risk to human health, and aiming to more precisely target the “Major” and “Area” level sources contributing to the presence of these pollutants in the atmosphere. 
3. Greenhouse gas regulation. The emission of greenhouse gasses is largely covered by the other regulations, as well as international climate targets, however the EPA now has express authority to address greenhouse gas emissions under the Inflation Reduction Act of 2022 (“IRA”), which specifically designated the major greenhouse gasses as within the remit of the EPA, as well as allocating it significant funds to assist its work in doing so.
   1. Under the terms of the IRA, the CAA was amended such that the EPA was empowered to allocate up to USD 27bn to “green banks”, which are financial institutions designed to invest in and expedite the use and deployment of clean energy initiatives and technologies.
        
      The idea behind this amendment was to spur the development of clean energy technologies, whilst also producing a return for the US Treasury through investment into fast growing and technologically innovative energy production methods.
         
4. Mobile Source Programmes (“MSPs”). The EPA regulates emissions from vehicles using internal combustion engines, as mandated by Congress.  The EPA is required by law to create and update regulations addressing emissions and air pollutants caused by motor vehicles, particularly those which may be detrimental to public health. 
5. New Source Performance Standards (“NSPSs”). NSPSs are a set of standards which require industrial facilities to be constructed in such a manner as to incorporate the “best system of emission reduction which (taking into account the cost of achieving such reduction) the [EPA] determines has been adequately demonstrated.".  The list of industrial facilities and technologies covered is extensive, but it is important to note that NSPSs only apply to new facilities, which gives the owners of such facilities an incentive to continue using older facilities, which are not bound by the relevant NSPS.

Enforcement

Under the provisions of the CAA, the EPA is able to issue fines, penalties, and to compel compliance with the relevant regulatory programme(s), and has significant latitude to take major and repeat offenders to court over breaches.  There have been a number of high profile victories for the EPA in the courts recently, including against major automotive corporates for their failures in relation to the diesel emissions reporting scandal.

Implementation

The CAA requires individual states to develop State Implementation Plans (“SIPs”), to implement the requirements of the Act.  The EPA sets minimum standards for air pollution, air quality, and various other metrics that states have to adhere to in their SIPs, but the states are able to decide on and set the methods by which these standards are met.  Should a state fail to implement a SIP properly, or implement a SIP that does not result in the state meeting the required minimum standards, the EPA is empowered to implement a Federal State Implementation Plan in that particular state.  It is worth noting that the state of California is afforded a carve-out from the regulation, so that it can implement stricter minimum standards to address its chronic smog and dust problem.

Legal challenges

The CAA and its underlying regulations have consistently been challenged in the courts, most recently in West Virginia v EPA. 597 U.S. (2022), where the Supreme Court ruled that a major Obama era regulation, the Clean Power Plan, was invalid due to a lack of ‘narrow congressional approval’.  We would expect further challenges in the coming years.

Environmental policy, non-financial reporting

In force

Facilities generating, disposing of, storing, treating, or transporting hazardous, industrial, and septic waste

The RCRA is the federal legislation which creates requirements for the storage, disposal, management, treatment, and transportation of various forms of waste.  The Act sets minimum standards for these metrics, and individual states are then authorised to bring in their own standards and state implementation plans, as long as the state standards are at least as exacting as those set out in the RCRA.

The RCRA contains provisions regarding the establishment and maintenance of landfills, and banned the use of open landfills when it was enacted.  It has been amended a number of times and contains provisions addressing a wide variety of waste issues, the full breadth of which is beyond the scope of this note, but which include provisions relating to medical, agricultural, catering, and electronic waste.

Penalties and enforcement

The RCRA is regulated and enforced by the Environmental Protection Agency (the “EPA”), as well as individual states under their state implementation plans.  Penalties for violation include up to fifteen years of prison time, and up to USD 50,000 per day fines for the most egregious violations.

Environmental policy, remediation, and mitigation.

In force

Privately and federally owned manufacturing sites and other establishments creating pollution and/or hazardous waste. 

The Superfund program is administered by the Environmental Protection Agency (the “EPA”), and is designed to facilitate the clean up and investigation of areas contaminated with hazardous substances and/or pollution. 

The goal of the program is to shift the burden of cleaning up sites from the taxpayer to the responsible person, entity, or entities.  The 2021 Inflation Reduction Act (the “IRA”) brought in an excise tax on chemical manufacturers, aimed at funding the EPA to clean up, mitigate, and remediate contamination, spills, pollution, and other releases of hazardous substances/materials.  This is a hypothecated tax, meaning the funds gathered through the tax are unable to be used by the government for any other purpose.  This pot of money funds roughly 30% of clean up and remediation costs, with the remaining 70% funded by the responsible entity/person (Potentially Responsible Parties (“PRPs”)), under the “polluter pays” principle. 

Superfund sites are identified and investigated by the EPA and state agencies based on a Hazard Ranking System (“HRS”).  The higher the score out of 100, the more urgent the clean-up and remediation operation is.  Once a Superfund site is identified (by scoring above a 28.5 on the HRS scale), it is placed on the National Priorities List (“NPL”), and designated for long term cleanup.  A list of the NPLs by state can be found here.

Superfund sites are categorised as either “remedial” or “removal” sites:

• Superfund sites designated as “remedial” are those placed on the NPL, and are the less urgent of the two categories. An example of a remedial site would be a landfill containing hazardous materials, or a disused and/or abandoned chemical manufacturing plant, which while not posing an immediate risk to human health or the environment, has the potential to be highly damaging in the future.
• Superfund sites designated as “removal” are sudden environmental urgencies that require immediate action. Examples include oil spills, chemical fires, leaks of poisonous and/or toxic chemicals into water supplies, and other emergencies.  In these cases, the EPA and state authorities will act urgently, as well as requiring the responsible party to take all possible mitigation measures as a matter of urgency, and seek compensation from the entities responsible at a later date. 

For more information, see the EPA’s explanatory page here, and in depth site here.

Enforcement and penalties

The principal penalty under the Superfund Act is the polluter pays principle, where the PRPs are identified and required to pay a proportion of the costs of the cleanup/remediation.  Identification of the PRPs can often be difficult, and in some cases impossible, especially in case where there are multiple PRPs, some historic (such as the builder of a chemicals plant that was sold to a number of different owners, who then sold the plant on themselves.  Where the PRPs cannot be identified wholly or in part, the funds from the hypothecated excise tax are intended to allow the EPA/state agencies to pay the difference.  PRPs fall into four categories:

• the current owner(s)/operator(s) of the site;
• previous owners/operator(s) of the site;
• anyone arranging for the disposal/treatment/dumping of hazardous materials at a site; and
• anyone responsible for transporting hazardous materials to the site.

Penalties can also include punitive fines and damages for failures to address the issues created; these can be especially severe in cases of egregious failures responding to removal sites, such as a “treble damages” penalty, imposed as a result of violation a “Superfund Unilateral Order”, which is a court order obtained by the EPA requiring parties to take an urgent and satisfactory response action.  For more information see here. 

Future

As with a number of environmental laws and regulations in the US, the future of the Superfund legislation is unclear, with the current administration signalling its desire to repeal the legislation, regarded as detrimental to fossil fuel companies’ interests. 

Environmental policy

In force

Federal agency actions.

Requires environmental review of major federal actions that significantly affecting the quality of the human environment. NEPA does not mandate a specific result or substantive outcome, but instead requires that environmental impacts be considered through the creation of an Environmental Impact Statement or an Environmental Assessment. Recently, the Council on Environmental Quality issued an update to the regulations implementing NEPA.

Environmental policy

In force

Federal agency actions

Ensures that actions authorised, funded, or carried out by federal agencies are not likely to jeopardise listed species or result in destruction or adverse modification of designated critical habitats. It also prohibits actions that constitute a "taking" of listed species, unless a proper permit is procured.

The ESA is implemented by the U.S. Fish and Wildlife Services and the U.S National Oceanic and Atmospheric Administration Fisheries Service.

Environmental law

In force

Businesses in California and Washington.

Plastic manufacturers in the two states will have to have their products contain certain minimum percentages of recycled plastic, increasing on 5 yearly timescales.

In California, this will be limited to plastic bottles, but in Washington, the law encompasses a wider range of plastic products.

Corporate governance policy

In force

Companies and individuals.

Antitrust law that promotes economic fairness and competitiveness to regulate interstate commerce. It outlaws contracts that unreasonably restrict trade and monopolies or conspiracy to monopolise.

Contains both civil and criminal penalties. Criminal penalties can be as high as $100 million for corporations and $1 million for individuals, but are typically limited to intentional and clear violations.

Corporate governance policy, social policy, financial reporting

In force

Public companies and individuals.

Series of federal regulations that provide revisions to a wide range of regulations including those related to consumer protection, trading restrictions, credit ratings, regulation of financial products, corporate governance and disclosure, and transparency. 

ESG policy

Voluntary standards

PE funds.

The American Investment Council membership has adopted a set of comprehensive responsible investment guidelines that its members apply prior to investing in companies and during their period of ownership. The guidelines cover environmental, health, safety, labour, governance and social issues.

Corporate governance policy, social policy

In force

Employers whose annual sales total $500,000 or more or who are engaged in interstate commerce

The FLSA establishes minimum wage, overtime pay, recordkeeping and youth employment standards affecting employees in the private sector and in federal, state and local governments. Workers covered by the FLSA are entitled to a minimum wage of $7.25 an hour, and overtime pay at a rate of one and one-half times the regular rate.

Most states and some cities in the US also have their own analogous laws.  These state and local laws often provide greater protections for employees than the FLSA does. For example, state and local minimum wage rates may be higher than the federal minimum wage rate, such as in New York City where the minimum wage is $15 per hour.

Law: 29 USC Ch. 8: FAIR LABOR STANDARDS (house.gov)

Regulations: eCFR :: 29 CFR Chapter V -- Wage and Hour Division, Department of Labor

Corporate governance policy, social policy

In force

Product importers, including non-resident importers, located in the United States.

Bans the importation and allows the detention or seizure of products produced using forced, convict, or indentured labour.

Recent developments: In 2019, the U.S. Customs and Border Protection blocked the importation of products suspected.

Corporate governance policy, social policy

In force

Entities engaged in the manufacture, processing, packing, transporting, distribution, reception, holding, or importation of food.

Authorises the U.S. Food and Drug Administration (FDA) to prevent food safety problems and, in doing so, to hold imported foods to the same standards as domestic foods.

Corporate governance policy, social policy

In force

Product importers, specifically of products manufactured in China.

Specified retailers must make specific disclosures on their website about efforts taken to eradicate slavery and human trafficking form direct supply chains for tangible goods offered for sale.

Corporate Governance Policy

Coming soon

Companies trading in securities exchanges.

Would establish requirements for publicly held companies to report greenhouse gas emissions by suppliers and partners in their annual 10K reports or elsewhere. The new rules may require specific metrics for certain industries.

Disclosures may include both qualitative and quantitative information requests, such as information on the company’s progress towards climate-related goals, effects of climate-related legislation and how the company’s leadership manages climate-related risks and opportunities.

Environmental policy

Voluntary standards

All companies

The Taskforce consists of 40 members who represent financial institutions, corporates and market service providers with over US$20trn in assets.

The Taskforce’s aim is to develop an international risk management and disclosure framework to enable organisations to report on, and subsequently act on, nature-related risks. By facilitating the transfer of information regarding nature-related risks, the framework will strive to encourage companies to incorporate these environmental considerations into their strategies and operations.

The Taskforce published the third version of its beta framework in November 2022. The final version will be published in September 2023.