ESG in the courts: risks, trends and defense strategies
ESG litigation is a reality in the international legal landscape. It exposes companies to significant economic and reputational risks, which should be anticipated through prevention and compliance, not only to reduce the likelihood of claims, but also to strengthen the defense if they ultimately cannot be avoided.
Civil litigation relating to sustainability, or under the ESG acronym (Environmental, Social andGovernance), has for some years now been a reality at global level.
The trend is especially clear in the more specific area of the “E”, where the concept of “climate litigation” is already well established. Within that category, a distinction is drawn between, on the one hand, litigation against States seeking respect for human rights and, on the other, litigation against private entities as a result of their activity, with the aim of holding them jointly responsible for the consequences of climate change or its aggravation; of the two, however, we refer here only to the latter. The types of litigation brought have been highly varied: from claims for damages arising from climate change and its effects, to actions seeking to require companies to reduce their polluting emissions, including actions for the adoption of preventive measures, claims against financial institutions for supporting projects that allegedly contribute to worsening climate change, and claims for greenwashing (literally, portraying a sustainability image that does not correspond to reality).
For their part, the “S” and the “G” have not escaped this trend. Thus, in the social sphere, the actions brought include, for example, claims relating to due diligence in the protection of human rights in supply chains. As regards governance, actions have been brought seeking to hold directors liable in connection with sustainability obligations.
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