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ESG Litigation and Risk Management

The transition to a more sustainable economy presents challenges and opportunities. Businesses need to be mindful of the liability risks that may arise in connection with both, so that appropriate ESG risk management practices can be implemented to mitigate the risk and properly avail of the opportunities.

ESG and climate change disputes continue to be on the rise globally (see our quarterly ESG Disputes Bulletin), often as a tool to push organisations to engage with the net zero transition with greater ambition, and to improve their ESG performance (including in relation to human rights) but also to challenge how ESG issues are being addressed. Claimants are submitting novel claims, with varying degrees of success. The existence and scope of a parent company duty of care, particularly in respect of human rights harms, is regularly being argued by claimants in a number of jurisdictions. A shifting regulatory landscape globally is offering further opportunities to bring proceedings. “Greenwashing” is clearly a priority globally for both financial and non-financial regulators. Focus on corporate disclosures and product claims will increase as requirements tighten, and regulatory findings in relation to disclosure failures can encourage follow-on investor claims.

Our global multi-disciplinary ESG team advises on a wide variety of ESG-related issues and can assist businesses to engage with the ESG litigation landscape to assess their liability risk and those businesses potentially at risk of facing ESG disputes (including greenwashing claims) or regulatory investigations.

How Linklaters can help you

ESG Litigation Risk

Climate and other ESG litigation continues to increase, often as a tool to push organisations to engage with the net zero transition with greater ambition, and to improve their ESG performance but also to challenge how ESG issues are being addressed. At the same time, increasing consumer and investor interest is encouraging claimants to look for novel ways to pursue claims. See our “ESG Disputes: routes to liability” publication for further details.

We regularly advise clients on ESG litigation risk, including in relation to ‘greenwashing’, parent company liability concepts, accountability for ESG harms, and class action risk. This includes developing a strategy to monitor risk, being in a position to respond to (actual or threatened) litigation, critical campaigns, NGO lobbying of investors and non-judicial complaints.

Regulatory Risk

With increased regulation globally relating to ESG issues, regulators are monitoring activity and increasingly taking action, particularly where ‘greenwashing’ is concerned. Focus on corporate disclosures and product claims is only likely to increase as requirements tighten and more guidance is published – including from non-financial regulators. Our team can assist in advising on and reviewing disclosures, not only to ensure regulatory compliance, but also to mitigate against litigation (and the significant reputational) risk in relation to ‘greenwashing’.

ESG Investigations

We provide ESG input including in relation to investigations (criminal and civil), public inquiries and stakeholder engagement. We have a deep understanding of the shifting ESG landscape, stakeholder perceptions and the need for a sensitive approach on ESG matters to achieve successful outcomes.

Risk Management and Compliance Frameworks

The challenges organisations face today are clear: myriad ESG-related rules and regulations, heightened scrutiny in many areas by investors, consumers and other stakeholders and technological disruption, to name a few. Against this backdrop, taking a more structured and robust approach to risk management is vital and is a priority for boards.

Our multi-disciplinary team delivers a holistic approach, helping clients identify, manage and mitigate strategic risks, including relation to ESG, and design and implement compliance frameworks that will drive behavioural and cultural change within organisations. We also provide strategic advice, including in relation to human rights and supply chain issues (environmental and human rights considerations) and have deep experience in supporting clients to ensure these shifting and increasing risks are factored into broader compliance frameworks.

Crisis Management

A corporate crisis is increasingly likely to be ESG-driven or include a heavy ESG component which needs to be handled appropriately and with respect to stakeholder interests and sensitivities. Our multidisciplinary crisis response team can mobilise swiftly and comprehensively to help you respond to the issues you are facing, offering you the support you need, wherever you need it, fitting into your own crisis management team and collaborating with your other advisers. We are experienced in navigating the crucial first 72 hours of any crisis, and then working with clients to build a cohesive crisis response framework, undertake investigations and advise on engagement with regulators, investors and other stakeholders as well as design and implement mitigation strategies, grievance mechanisms and alternative remedy schemes.

Selected ESG litigation and risk management experience

A major financial institution: advising, on an ongoing basis, on ESG litigation risk, which includes providing strategic advice on potential implications and a quarterly overview of thematic and specific risks.

Several financial institutions: advising on emerging litigation risk associated with ESG-related disclosures, including potential failure to comply with representations on transition or climate policies.

A major telecommunications company: advising with respect to the climate litigation landscape and potential greenwash liability.

Featured content

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ESG Soundbite Series

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ESG Disputes: routes to liability

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Running the greenwashing gauntlet: exploring the litigation and regulatory risks

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Webinar: Greenwashing: Lessons learned and practical tips

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Overview of NGO-led climate litigation

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