Target and its board are fending off two lawsuits stemming from its 2023 Pride Month campaign claiming that its board of directors misled shareholders on the reelection of its members because of inadequate risk disclosures related to the campaign. The litigation against Target “is likely to embolden plaintiffs” to go after companies that have taken more aggressive stances on DEI and other ESG matters, such as climate change, Bracewell’s Troy Harder explained to Agenda.
In an effort to safeguard against these claims, or bolster defenses when a lawsuit is filed, boards should ensure that their companies are accurately disclosing risk factors in 10-K forms, as well as using board minutes to document the conversations taking place related to the oversight of these risks, Harder said.
“You’re required to describe the material risks that the company faces,” Harder said. “You want those to be broad enough to capture all of the potential risks, but, where applicable, use specific examples and be specific in terms of what the consequence would be if that risk materializes.”
