Sustainability, Impact & ESG

Overview

Your management of corporate sustainability issues can have a significant impact on your business’s standing and reputation with investors and other important stakeholders, and on your bottom line. Before making investment decisions, investors increasingly assess how well you integrate sustainable principles of value creation into your business for insights into your future financial performance. Other stakeholders seek to hold your business accountable for the environmental and societal impacts of your operations. To better position your business for long-term value creation, we offer experienced and knowledgeable legal counsel for establishing and maintaining effective sustainability practices. We also advise investors and other financial market participants with regard to sustainable investments, such as green bonds, and social and environmental impact finance transactions, as well as investments based on consideration of environmental, social and governance (ESG) factors, which has become an important asset class worldwide.

At McDermott, sustainability issues arise in nearly all our practice areas. To counsel you on strategic decisions and transactions relating to business sustainability, and to guide you and investors through the intricacies of the sustainability ecosystem—including compliance with existing and proposed regulatory requirements, and industry and other non-governmental sustainability standards, frameworks and guidance—our interdisciplinary team collaborates across our offices around the world. We bring you top-ranked practitioners in relevant areas, including Energy, Capital Markets and Public Companies, Insurance, Private Equity, Investment Funds, Employment, Environmental, Impact Finance, Transactions, Executive Compensation and Data Privacy.

Our capabilities include, among others, the following:

Corporate Advisory – Sustainability, Capital Markets and Governance We draw on our skill and experience, aligned with a deep understanding of your industry, to help you design and implement new or enhanced sustainability programs and investment strategies aimed at achieving your sustainability and market objectives. Our priority is working with you to identify financially material risks and to capitalize on actionable opportunities around sustainability, ESG ratings and reporting, governance, M&A due diligence, shareholder proposals and compliance. We partner with you to assess the material sustainability aspects of your operations and products, working together to develop transformational strategies and new sustainability initiatives—both upstream in your supply chain and downstream in your products. We also help you respond to investor requests for sustainability information, report on goals and achievements, monitor and comply with existing and proposed sustainability disclosure requirements, and identify and take advantage of new opportunities for growth and innovation.
Renewable Energy and Other Natural Resources Because the risks of climate change and environmental degradation have drawn increased attention from regulators, industry, consumers, activists and the public at large, companies reliant on natural resources face significant sustainability challenges affecting their business models and industries—and their relationships with employees, investors, regulators and the communities where they operate. We have one of the largest renewable energy practice groups in the world, and we tap our experience to support your strategic investments in renewable energy, agriculture, water and other natural capital projects. Spurred by rising pressure to reduce emissions and meet sustainability mandates, as well as potential cost savings on energy, corporations are increasingly buying electricity from wind farms and solar parks, so one of our primary areas of focus is structuring corporate power purchase agreements for the purchase of clean energy. Additionally, our work includes the development, acquisition and divestiture, and financing of wind projects (onshore and offshore); private and publicly owned utility scale solar facilities; residential, commercial and industrial solar projects; landfill gas; biomass; digesters; fuel cells; micro turbines; water and a variety of other biofuels projects. We also advise the Secretary of Commerce and the Biden Administration on mobilizing private sector finance to reach its greenhouse gas pollution reduction targets.
Investment Funds As a private equity, hedge fund or venture capital sponsor, or as an institutional investor, you are in good company among our clients working toward meaningfully incorporating ESG into their investment and compliance programs. Whether you are motivated by an inherent mission and strategy, or you are responding to increasing institutional investor and limited partner-driven demands that ESG considerations be integrated into the investment committee’s decision-making process, we are at your side to advise on proactive structures and approaches. We will also partner closely with you to prepare for the next decade’s anticipated regulatory requirements and investor-driven demands, as the SEC and the European Union focus on how to integrate sustainability-related disclosures into the existing compliance regime governing investment funds. Additionally, we advise private equity sponsors on ESG investment strategies, acquisition due diligence and “future-proofing” portfolio companies through active engagement to enhance returns upon exit events.
Impact and Green Finance Our impact finance and sustainable solutions team has worked on some of the most innovative cross-border and domestic finance transactions targeting social interventions and achievement of the United Nation’s Sustainable Development Goals (SDGs) for governments, non-governmental agencies, funds, global foundations, private equity houses and financial institutions. We stand by you through the full cycle of a sustainable finance transaction, from structuring, governance, documentation, tax and regulatory advice to impact investment reporting and post-closing matters relating to impact evaluation. Our impact finance team can also provide you with training and research to support your work in the impact finance sector or provide introductions in this fast-evolving space. From establishing mission-driven private investment funds focused on investments in sustainable food and agriculture, renewable energy, and innovative climate technology to advising on the issuance of green and development bonds and other capital market solutions, we have worked across practices and borders on some of the most innovative mechanisms that deliver finance for a positive global social impact. We have extensive experience in structuring sustainable finance solutions for both environmental and social interventions, and we have spent more than a decade advising on a range of impact finance initiatives, including some of the most ground-breaking cross-border impact bonds in the world.
Leveraged Finance As the leveraged finance market increasingly recognizes that ESG issues can be credit-relevant, and ESG risks can have potentially negative effects on cash flows and enterprise value, we advise both borrowers and investors on integrating ESG considerations into investment decisions. In loan transactions and debt offerings, we have a strong understanding of due diligence and disclosure under relevant securities laws, market standards and existing and emerging voluntary and mandatory corporate disclosure requirements. Whether you are an issuer, investor or investment bank, we use our experience and knowledge to help you produce and evaluate appropriate disclosures for financially material ESG topics relevant to your business. We also advise on the emergence of contractual provisions in credit agreements concerning ESG-related representations, pricing incentives, information undertakings and covenants. We are a participating firm in the European Leveraged Finance Association’s ESG Disclosure Initiative, which recently published the Guide for Company Advisers to ESG Disclosure in Leveraged Finance Transactions, available here.
Environmental Risks and Opportunities From carbon credits to toxic torts, we are well qualified to advise, assist and, if necessary, defend you in connection with the ever-expanding universe of environmental topics and environmental matters. We advise on climate change-related risks and opportunities, carbon-related commodities, environmental insurance and disclosure obligations. Depending on your needs, we also handle bet-the-company environmental litigation, compliance investigations and enforcement actions; intricate regulatory, rulemaking and permitting matters; and corporate transactions involving complex compliance and contamination issues.
Insurance To defend your interests and help you stay a step ahead, we take a proactive approach to monitoring insurance regulator proposals with respect to climate change. Our ongoing review includes New York’s proposed comprehensive climate change regulatory framework, the International Association of Insurance Supervisors (working with the UN Sustainable Insurance Forum), and financial services regulators in the EU, UK, Bermuda, Canada, Australia and New Zealand. We also keep close tabs on the National Association of Insurance Commissioners’ climate change regulatory activity, along with efforts by state insurance regulators designed to improve insurer governance around climate change and to address the disproportionate impacts of climate change on lower-income areas and communities of color. We advise both US and non-US insurers on drafting various sustainability disclosures, and on ESG investment issues, including analyzing proposed impact investments and green investment fund vehicles.
Employment – Diversity, Equity & Inclusion and Employee Engagement Adopting policies and practices to build a strong company culture both to meet the expectations of your various stakeholders and to ensure compliance with laws and regulations is critical to your success—and requires attention, agility and decisive action. Our wide-ranging global employment capabilities include advising you on best practices regarding various ESG issues such as diversity, equity and inclusion; human rights; occupational health and safety; mental health; employee engagement; pay equity; fair wages; family leave policies; non-disclosure agreements; human capital development and working conditions. In addition, we are deeply familiar with the myriad of union and works council issues multinational employers face across the globe. Our work in this area includes labor arbitrations, collective bargaining, unfair labor practice and representation hearings, and other labor-related litigation involving complex labor issues. To help you anticipate emerging workplace issues, we make it a priority to proactively identify trends in your industry and in society at large.
Executive Compensation and Retirement Plans For alignment with strategic sustainability objectives, short- and long-term management incentive plans at public companies more frequently include sustainability performance goals. We draw on our history of partnering with compensation committees, management and consultants in working with you to review legal, accounting and disclosure requirements around sustainability metrics in compensation plans. We also provide counsel to 401(k) retirement plans considering the inclusion of ESG sustainable investment options; although the Department of Labor has announced that it will not enforce rules adopted in 2020 that placed greater regulatory burdens on these investments, there have been more than 100 class action lawsuits challenging investment options under the Section 401(k) plan as being imprudent.
Privacy and Data Security Data privacy and cybersecurity are prominent sustainability issues for your board, lenders and investors, and data privacy is a particularly critical issue given your reliance on data collection and handling. Privacy laws around the world are developing quickly and often impose hefty penalties for non-compliance, underscoring the social and ethical concerns associated with the use of personal data. Our top-ranked data privacy and cybersecurity lawyers are located in offices across the US and Europe, with the cross-industry experience and skill to advise you on effective strategies to govern privacy and cybersecurity risk. Because a rapid rise in cyber incidents affects companies of all sizes and levels of sophistication—with potential impact not just on your own data and operations, but on your entire industry—we advise on the importance of cybersecurity governance. Should you experience a privacy or cyber incident, our deep bench of lawyers can rapidly engage to guide you through the incident and the complicated compliance and other issues that often arise.

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Results

Representative Sustainability, Impact & ESG Experience

Investment Funds: Represented a family office in forming, structuring and operating a billion-dollar investment fund program focused on private investments in renewable energy, sustainable food and agriculture and ocean cleanup companies.
Corporate Power Purchase Agreements: Represented Unilever as the host customer and offtaker of third-party owned solar systems (rooftop and ground mount) at multiple Ben and Jerry’s production facilities in the United States, including negotiation of real property related access and easements required for construction of the systems.
Corporate Power Purchase Agreements: Represented Unilever as the customer purchasing the entire output of a 150 MW wind farm in Tom Green County, Texas for purposes of satisfying its nationwide corporate renewables goals.
Corporate Power Purchase Agreements: Represented the Sisters of Notre Dame, as the power buyer, in a power purchase agreement for the offtake of solar power for a hospital facility in Massachusetts.
Corporate Power Purchase Agreements: Represented the Catholic Archdioceses of Washington, D.C. in the purchase of solar power for several of its facilities in the Washington, D.C. area.
Electric Vehicles: Represented WABCO Holdings Inc. (WBC), a leading global supplier of technologies and services that improve the safety, efficiency and connectivity of commercial vehicles, in its $10 million strategic investment in Nikola Motor Company, a leader in the design and manufacturing of hydrogen-electric vehicles, vehicle components, energy storage systems, and electric vehicle drivetrains.
Innovative Finance: Advised the GAVI Fund Affiliate on its entry into grant agreements with ten governments and a framework agreement with those governments, the International Finance Facility for Immunization Company (IFFIm) and the World Bank. Those grants are being used to finance bonds issued by IFFIm which provides upfront funding for accelerated vaccination programs organized by GAVI (formerly the Global Alliance for Vaccines and Immunization) in 70 of the world’s poorest countries.
Impact Bonds: Advised on the ground-breaking, cross-border impact bond known as the “Utkrisht Bond,” from the Hindi for “Excellence.” The Utkrisht Bond is an example of how highly efficient use of capital can save lives. The bond aims to reduce the number of mother and baby deaths by improving the quality of maternal care in Rajasthan’s health facilities. The money will be used by service providers to improve access to and quality of care in up to 440 private facilities in Rajasthan, supporting government efforts to reduce maternal and new born deaths. Interventions will reach up to 600,000 pregnant women with improved care during delivery and could lead to up to 10,000 lives being saved over a five-year period. The transaction was widely reported on in the press and media, and it breaks new ground with its innovative features enabling cross-border funding to target social interventions around the world.

Education Program: Jointly acted for UNICEF and the Education Outcome Fund (EOF) in relation to EOF’s work in Africa and the Middle East with respect to the design of a new outcomes program for education systems around the world. The team advised EOF and UNICEF in setting up a joint structure, which involved the complexities around alignment between the outcomes based model in relation to EOF’s underlying education programs in various jurisdictions and conforming the contractual structure to the fund establishment within the composition of UNICEF. As a result of this important transaction, EOF now performs on a global fund platform; operating as an independent trust fund hosted by UNICEF who provide fund management, legal, procurement and administrative services to EOF.
Impact Bonds: Advising the British Asian Trust – a charity set up by the Prince of Wales – on the legal and structuring aspects of an $11m impact bond, which aims to improve the literacy and numeracy learning standards of approximately 300,000 primary school students from marginalized communities in the state of Gujarat, Uttar Pradesh and the National Capital Region in India.
Microfinance: Advised Five Talents, the microfinance arm of the Church of England that provides innovative savings schemes, small loans and business training for the poor on sustainable funding models that could be applied in funding their projects in Africa.
Impact Funds: Provided structural and tax advice on the setting up of the US entity of Willow Impact Investors, an award-winning impact investment firm that manages social impact funds with a focus on Eastern Africa, the Middle East and North Africa.
Infrastructure – Water Sanitation: Implemented a five-year, $362 million compact with the Government of Lesotho to fund the rehabilitation of the Metolong Dam, as well as work with PEPFAR (the President’s Emergency Plan for AIDS Relief) to mitigate the negative economic impacts of poor maternal health, HIV/AIDS and tuberculosis; this involved representation of the government of Lesotho in an EPC contract for the rehabilitation of the Metolong Dam.
Infrastructure – Markets: Implemented a five-year, $295 million compact with the Government of Georgia to rehabilitate regional infrastructure, accelerate enterprise development, and increase access to jobs and markets.
Infrastructure – Roads and Transportation: Implemented a $540 million compact with the Republic of Senegal, investing in the road network and essential irrigation schemes in the Senegal River Valley and the Casamance region to align to the country’s comprehensive long-term objectives of enhancing national growth and food security; this involved representation of the government of Senegal in an EPC contract for roads in that country.
Investment Funds: Advised various Alternative Investment Fund Managers on the structuring and implementation of sustainable Alternative Investment Funds under the European Union Sustainable Finance Disclosure Regulation and Taxonomy Regulation.
Private Equity: Represented a leading pan-African private equity firm, along with its investment partners, in connection with a $3.1 billion equity and debt financing for IHS Towers, Africa’s leading African telecoms infrastructure business, recognized as Africa Investor’s “African Infrastructure ICT Project Developer of the Year 2015.” This investment included the implementation of the private equity firm’s ESG management system, which follows World Bank standards and International Finance Corporation performance standards.
Agriculture: Implemented a five-year, $461 million compact with the Government of Mali to improve agricultural production and expand access to markets, as a result of key infrastructure investments in the Bamako-Sénou International Airport, gateway for regional and international trade, and the Niger River, for irrigated agriculture; this involved representation of the government of Mali in an EPC contract for the Bamako-Sénou.
Access to Energy: Advised on the White House’s Power Africa Initiative, a US government-led impact investing and social enterprise program to increase at risk populations in Africa’s access to energy generation (both on and off grid), transmission and distribution that has resulted in the completion of more than 80 projects worth over $14 billion.

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Sustainability, Impact & ESG

Overview

IMPROVING OUTCOMES: To deliver education to vulnerable children worldwide, UNICEF turned to innovative impact finance solutions to scale the most ambitious global education outcomes fund ever created.

"The team has been superb - they deal with highly complex matters, involving legal, political, and diplomatic sensitivities with great skill, professional sophistication, and intellectual finesse."

“Excellent technical competence combined with a creative approach to finding solutions”

“As a global company, we rely on them without hesitation. They are incredibly responsive, creative, ethical and grounded”

“They consistently produce high-value work. They do a great job quickly analyzing and reporting out on regulatory and legislative change”

“Highly Recommended” premier energy and energy tax practice with particular focus on renewable energy; deep experience representing tax equity investors and developers in renewable energy transactions, and in particular commercial-scale solar projects.

Results

People

Key Contacts

David A. Cifrino

Carl J. Fleming

Ranajoy Basu

Raminta Dereskeviciute