Last month, I had the privilege of joining my colleagues Karyl Van Tassel, CPA, CFF, Richard Donohoe, and Nicole McTernan for a fireside chat regarding the expected impacts of looming Securities and Exchange Commission (SEC) regulations on Environmental, Social, and Governance (ESG) disclosures from multiple perspectives – accounting, technical, IP, and valuation.
From an Intellectual Property (IP) perspective, it is very interesting to see the distribution of investment in ESG-related technology that is underway. A good illustrator of this is LexisNexis’ mapping of patented technology to the United Nations (UN) Sustainable Development Goals (SDGs). The SDGs are 17 goals for global development adopted in 2015 by all the world’s countries with a goal to be achieved by 2030. Each of the 17 goals has individual targets and metrics, and they cover everything from elimination of poverty and hunger to access to clean energy and water, to gender and income equality.
LexisNexis went through supporting documentation for the SDGs provided by the UN and linked them to related patents owned by the top 100 corporate patent owners (patents are often used as a proxy for technological investment and development).
Image by LexisNexis PatentSight.
A big takeaway is that if you look at which SDGs have the most investment in technology, there seems to be a focus on solutions related to energy and the environment, health and well-being, and sustainable production and consumption. This is consistent with the trends we have been seeing at Ocean Tomo in our valuation and management consulting work for clients. Whereas a few years ago, clients with ESG-focused IP were sometimes scarce, today almost every other client we work with has an ESG tilt.
Going back to the proposed SEC rules, this trend is what we expect they will accelerate. Increased transparency from ESG disclosures will lead to increased pressure to act from stakeholders. This will manifest itself in a reallocation of capital to ESG-focused companies, technologies, and intangible assets.
Noor Al-Banna is a Director with the Valuation practice, working from the Chicago Office of Ocean Tomo, a part of J.S. Held. The practice area appraises intellectual property and various intangible assets for acquisitions and divestitures, bankruptcy and restructuring, establishment of intellectual property monetization strategies including licensing, mergers and joint venture/partnership formations, litigation support, and financial reporting and tax matters. The practice also has experience valuing business enterprises and equity interests for litigation support purposes that includes expert testimony experience in state and federal courts that includes Delaware Chancery Court.
To explore this topic and how it could impact your business, please contact: Noor Al-Banna, CFA at Noor.AlBanna@jsheld.com or +1 312 327 4434.