Environmental, Social and Governance (ESG)

Growing investor demand for ESG vehicles — and the possibility of creating value through ESG-driven investments — presents investment funds with exceptional opportunities. However, pursuing those opportunities requires funds to rethink everything from investment strategy to product terms to compliance. SRZ draws on its unparalleled experience working with fund sponsors to help them in:

• Revising current investment guidelines to incorporate ESG considerations
• Creating new ESG-focused investment products
• Developing policies for engaging with portfolio companies regarding ESG issues
• Establishing guidelines for responding to investor questionnaires and for crafting side letters
• Customizing funds of one or more managed accounts to conform to a specific investor’s ESG mandate
• Coordinating back-, mid- and front-office functions to ensure that ESG disclosures and marketing documents conform with actual practices
• Ensuring that ESG programs have adequate compliance controls
• Evaluating the pros and cons of signing onto ESG protocols
• Incorporating ESG considerations into funds' workplaces

Our ability to help funds think through their ESG strategies in the context of the dynamic regulatory environment can be seen in our work advising Engine No. 1 on their comment letter to the SEC about recently proposed rules regarding the enhancement and standardization of climate-related disclosures for investors.

The desire to generate ESG-themed products has reached structured finance. But what makes a CLO or risk-transfer trade “green”? The lack of clarity on this question puts the onus on issuers to have well-defined ESG criteria for their portfolios — and presents an opportunity for those issuers to distinguish themselves before investors. SRZ works with structured finance issuers to help them design, implement, monitor and disclose ESG products by:

• Developing criteria for securitizations, including those based on the use of financing proceeds, the assets being secured, and the ESG credentials and industry of the borrowers
• Creating scoring and filtering mechanisms — both negative and positive — for the consistent application of ESG criteria
• Reviewing and revising due diligence, compliance and disclosure procedures to incorporate ESG considerations
• Responding to investor queries regarding the alignment of product criteria with investor guidelines

Investors — both passive and active — have powered the growth of the ESG market. SRZ has been a strategic adviser on some of the most important investor-led ESG initiatives at public companies, including advising Engine No. 1 in its historic impact-focused proxy contest that resulted in the election of three directors to the Exxon board and helping JANA Partners push Apple to address the effect of its products on children’s health. We apply our peerless understanding of the activism marketplace to help ESG-minded investors across the engagement spectrum drive sustainable value creation by:

• Assisting with the design and execution of ESG-related activist campaigns and shareholder proposals
• Counseling on ESG market trends and developments, both with respect to investors and issuers
• Performing ESG-specific due diligence
• Identifying ESG opportunities within traditional value-based activist campaigns

When a private equity firm acquires a company, it is becoming more common to consider a target's ESG profile as part of the deal. SRZ works with private equity firms to incorporate ESG considerations into every stage of a transaction’s lifecycle, for both platform and follow-on acquisitions by:

• Integrating ESG factors into target due diligence, including evaluation of ESG-based financial and reputational risk
• Assisting in developing or strengthening ESG programs post-closing
• Monitoring and staying ahead of regulatory developments
• Assisting in due diligence and implementing post-controls regarding customers and suppliers

Tax-exempt organizations have been at the forefront of ESG investing from the start. But as public discussion and expectations around ESG-related issues evolve, ensuring that an organization’s mission and values are reflected in its portfolio has grown increasingly complex. SRZ works with tax-exempt entities to help them keep pace with the changing ESG environment. Our capabilities include:

• Reviewing the organization’s investment guidelines against its evolving mission and values
• Evolving from a negative screening approach to a focus on positive impact
• Balancing philanthropic and social impact goals with tax and fiduciary considerations

The estate planning process offers a powerful way for individuals and families to engage with ESG issues — from making ESG-friendly investments to funding charitable causes focused on ESG issues and raising ESG awareness. SRZ works with high-net-worth individuals to develop and execute a comprehensive vision for the transfer of wealth and for their philanthropy and, as part of that process, helps those clients to anticipate the challenges that can emerge along the way. We have extensive experience in helping entrepreneurs and investment fund managers with their estate planning and related needs, particularly in the context of ownership and succession matters regarding active business ventures. Our capabilities include:

• Balancing tax, fiduciary, and governance issues with philanthropic and social impact goals
• Crafting estate plans to consider the role of ESG in investing
• Assisting in creating ESG-driven philanthropic initiatives

As the importance of ESG continues to increase, scrutiny from investors, customers and employees regarding how companies’ compensation programs include ESG factors is surging. Many companies have begun to tailor their compensation programs to incentivize their employees — from senior executives to rank-and-file employees — to achieve ESG initiatives. We advise clients — both investors as well as companies — regarding how equity-based and other compensation arrangements meet, or can be designed to better incentivize employees to achieve, companies’ ESG goals.

Sustainable Operations

We take seriously our responsibility for environmental stewardship and in all of our offices rigidly follow regional and national regulations and guidelines. We are committed to minimizing our carbon footprint by:

• Enforcing strict paper generation and recycling requirements
• Eliminating the use of plastic and other non-biodegradable products
• Leveraging energy-efficient lighting and electrical consumption controls
• Requiring our third-party service providers and vendors to adhere to the same environmental standards observed by the firm

Our office building at 919 Third Avenue is green-building certified, meeting or exceeding the best practices set by LEED, ENERGY STAR and BOMA 360. 919 Third is LEED Gold-certified by the U.S. Building Council. Additionally, we follow state guidelines for recycling within our offices; our copiers and printers default to double-sided printing. Our offices and corridors use LED lighting with occupancy sensors, and our partner offices and conference rooms feature programmable light switches with occupancy sensors as well. In an effort to minimize the use of our elevators and offer our employees a fitness-focused alternative, we constructed an internal stairway that connects our nine floors. In our cafeteria and pantries, we use recyclable products and food containers. For efficiency, we control our HVAC systems using a building management system, which allows us to manage thermostats and airflow within our interior space and all auxiliary air conditioning units.

919 Third/SL Green

WiredScore: Platinum 2021

U.S. Green Building Council: LEED GOLD

International Well Building Institute: Well Health-Safety Rated

Building Owners and Managers Association International: BOMA 360 Performance Program

Fitwel

Diversity, Equity and Inclusion (DEI)

At Schulte Roth and Zabel, promoting diversity, equity and inclusion is central to the firm’s values and a top priority. We want every member of our community to feel comfortable bringing their whole selves to work and for each of us to have the opportunity to reach our full potential. Diversity, equity and inclusion are more important than ever as our country faces unprecedented challenges. We are mindful of this as we imbed inclusion in everything that we do to strengthen our ability to provide effective and superior services to our clients. These core values are central to our success as a firm.

We are committed to principles of diversity, equity and inclusion (“DEI”). We strongly believe that continuing to build a more diverse workforce drives innovation, improves financial performance and results in a net positive for our firm. We strive to maintain an inclusive and equitable work environment for all of our employees and to build a firm that better reflects the diversity in communities where we practice while doing our part to help eliminate persistent inequities in our profession. In addition to internal efforts to meet these commitments, we seek to partner with high-quality external organizations to advance these important initiatives. We currently partner with 100 Women In Finance, and we look forward to growing additional relationships that help our business advance this important work while providing opportunities for our diverse talent.

Pro Bono

The work that Schulte Roth & Zabel does for many of our pro bono clients enables them to contribute to and drive social change in impactful ways. 

SRZ pro bono clients affecting social change include:

• Tulsa Race Massacre and Justice for Greenwood:  The 1921 Tulsa Race Massacre was wiped from our history books for decades and the perpetrators were never held accountable. To seek justice through the legal system, we have partnered with our pro bono client, Tulsan attorney and Justice for Greenwood founder Damario Solomon-Simmons, to co-counsel the groundbreaking lawsuit, Randle v. City of Tulsa et. al. SRZ, Solomon-Simmons, and a team of civil and human rights lawyers represent the Massacre's only three known living survivors, as well as descendants of victims.
  How and Why Schulte Roth & Zabel Joined the Historic Tulsa Race Massacre Lawsuit – View the video here.
• Partners In Health (PIH):  PIH believes quality health care is a universal human right. We have provided critical legal services to PIH for more than 15 years, advising them as they grew to provide services to millions of patients in 12 countries and employ 18,000 people worldwide. In partnership with PIH, we helped start Village Health Works, which brought health care to Burundi. They are now building Burundi's first hospital for women. In Rwanda, PIH has brought high-quality health care to more than 860,00 people and established its University for Global Health Equity.

• Bazelon Center for Mental Health:  We co-counsel with The Bazelon Center for Mental Health on a federal class action lawsuit in D.C. to hold the District accountable to provide accessible, quality mental health care to indigent children in an effort to stop the cycle of mostly black and brown children with mental health disabilities who are either subject to or at risk of unnecessary institutionalization, in psychiatric or juvenile detention facilities, or are sent to out-of-state private residential treatment facilities, far from their families and communities.

• Southern Poverty Law Center (SPLC):  We work with SPLC to protect voting rights in Alabama and Georgia. We drafted a report on the current conditions of voting rights discrimination in Alabama that was entered into the Congressional Record to support the passage of The John Lewis Voting Rights Advancement Act (HR4). We are also co-counsel with SPLC and other voting rights organizations in a lawsuit to dismantle racially gerrymandered districts in Cobb County, Georgia.

• National Advocates for Pregnant Women (NAPW):  An SRZ pro bono client since 2015, NAPW has been working at the intersection of criminal justice and reproductive justice for over 20 years, defending the rights of pregnant people against criminalization because of pregnancy. SRZ has served as their outside general counsel on matters related to employment, real estate and other general corporate matters. We also recently partnered with them to research and draft the timely multidisciplinary guide for professionals, Confronting Pregnancy Criminalization.

• Tanenbaum:  We work with the Tanenbaum Center for Interreligious Understanding to protect the rights of LGBTQI+ individuals against discrimination based on religious beliefs.

• Too Young to Wed (TYTW):  We work with Too Young to Wed to protect and empower young women to prevent child marriages. We counseled TYTW as it evacuated hundreds of high-risk women and young girls and their families from Afghanistan when the Taliban gained control.

• Glynwood: Glynwood Center for Regional Food and Farming promotes regenerative agriculture in service of our natural environment, local economies and human health. SRZ provides general counsel services to Glynwood, promoting its work to train a generation of farm and food system professionals that care deeply about the environment. We support Glynwood’s Hudson Valley Farm Business Incubator cohort, which helps women and minorities set up their small farming businesses in the Hudson Valley. 

• Foundation Rwanda:  We helped start Foundation Rwanda in 2007 and continue to represent Foundation Rwanda, which has supported the education of more than 830 young Rwandans who were born from rapes during the genocide, and to provide counseling and holistic services to their mothers.