2024 Year-end wrap-up – Business trends, challenges and opportunities

4. Navigating sustainability issues

Environmental, social, and governance (ESG) initiatives have faced significant challenges in recent years. Amid greater regulation and political and consumer backlash, “greenhushing” – the practice of not publishing climate goals and actions – has become more widespread. 

Many investment firms have reduced this support for organizations addressing climate change, following backlash from lawmakers who accuse these firms of promoting “woke capitalism.”

However, climate change continues to be extremely important to consumers, particularly young people. In addition to favoring brands that prioritize sustainability and ESG, Gen Z and millennials are choosing to leave jobs they feel are not in line with their values. Research from Deloitte shows that 45% of workers in these generations have left or plan to leave their jobs over climate concerns.

These contrary forces of pro and anti-sustainability forces will continue to stay active, particularly through an election year.

At the same time, global ESG and sustainability reporting is shifting from voluntary to mandatory. The EU is leading the way. The U.S. is following suit with the recently finalized SEC-climate disclosures, the California Climate Accountability Package, climate disclosure rules in Illinois and New York, and the Federal Supplier Climate Risks and Resilience Proposed Rule.

U.S. businesses should continue to identify relevant ESG and sustainability regulations and take action to mitigate associated risks.

5. Changing statutory and regulatory landscape in 2024

State and federal statutes and regulations affecting corporations are updated annually, but 2024 introduced some of the most impactful changes in years. These include a new federal reporting requirement, contentious amendments to Delaware corporate law, and U.S. Supreme Court rulings that reshape how federal agencies regulate corporations. Let’s take a look:

• Beneficial ownership information reporting begins. The federal Corporate Transparency Act (CTA) took effect on January 1^st, requiring an estimated 32.6 million corporations, LLCs, and certain other entities to file a beneficial ownership information report (BOIR) with the Financial Crimes Enforcement Network (FinCEN) between January 1, 2024, and January 1, 2025. Although most large corporations are exempt, that does not mean large corporations are not impacted by the CTA. Corporate organizations may include many entities that are reporting companies. Now, BOI reporting must also be considered when corporations are considering acquisitions, forming joint ventures, and entering into many other transactions.
• State beneficial ownership information legislation. In addition to the federal CTA BOI reporting requirements, a few states have also introduced legislation to require beneficial ownership information reporting. In 2024, legislation was introduced or pending in Maryland, New York, California, and Massachusetts. New York’s BOI legislation was signed by the governor in March, and LLCs must start reporting BOI in 2026. Although no other states have enacted BOI legislation (the District of Columbia has required BOI reporting since 2020), this is a legislative trend that must be watched.
• “Market practice” amendments to Delaware’s General Corporation Law. Delaware corporations, which comprise a significant percentage of publicly-traded corporations and the Fortune 500, must always be aware of the amendments made to the Delaware General Corporation Law (DGCL). The DGCL is amended each year, typically with little controversy. Not so much in 2024.

The 2024 amendments were a response to a series of Delaware court decisions that invalidated or called into question certain practices that had become commonplace in the market. The amendments validated these practices. This included an amendment authorizing a corporation to enter into an agreement with a stockholder giving the stockholder certain governance rights, without those rights being set forth in the certificate of incorporation. This amendment was opposed by Delaware’s judges, corporate law professors, and others. Other 2024 amendments to the DGCL included a provision stating that when the DGCL requires the board to approve an agreement, document, or instrument, it may be approved in substantially final form as well as final form. Another amendment was regarding provisions that can be included in a merger agreement.

• Amendments to UCC laws regarding digital assets. Many corporations are entering into transactions involving digital assets or lending transactions in which digital assets are collateral. They should pay attention to the growing number of states amending their state UCC laws to clarify issues with transactions involving digital assets and facilitate the perfection of security interests in digital assets. In 2022, amendments were adopted to the Uniform Commercial Code addressing digital assets. So far, 25 states have adopted these amendments, with 14 states adopting them in 2024.
• State consumer data privacy laws. Many corporations collect personal data. They should be aware of the growing number of states (19 so far) that have enacted consumer data privacy laws that go into effect this year and beyond, as these laws place several compliance obligations on certain data collectors.
• U.S. Supreme Court restrictions on federal agencies. Corporations subject to regulation by federal agencies should be aware of three U.S. Supreme Court decisions significantly impacting federal agencies’ authority and ability to regulate:

1. Securities and Exchange Commission v. Jarkesy et al.: The Court ruled that the SEC must bring civil penalty actions for securities fraud in federal court, not in an in-house administrative hearing. 
2. Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al.: The Court overturned the Chevron doctrine, which required deference to a federal agency’s interpretation of a statute under certain circumstances. 
3. Corner Post, Inc. v. Board of Governors of the Federal Reserve System: The Court decided that the six-year time limit for suing a federal agency starts when the agency's final action harms the person, not when the action itself is completed. 

• Some other developments to track. Among other legislative and administrative developments occurring in 2024 that bear following are efforts on the federal and/or state levels to ban non-compete agreements, further regulate the use of AI, and submit HSR (Hart-Scott-Rodino) Act pre-merger notification filing with state attorneys general.

Learn more

CT Corporation is dedicated to helping your business stay compliant so you can focus on the year ahead. If you want to learn more, contact CT Corporation today.