Dovetailing from our recent deep dive, which provided a look at some of the most critical pieces of environmental, social, and corporate governance (“ESG”)-centric legislation in the European Union, it is worth keeping an eye on trends in the ESG litigation space, as cases in this realm are expected to continue to climb in number (and importance) this year. Speaking on a panel recently, Perkins Coie partner Brian Sylvester said that “ESG claims made against companies have gained momentum in recent years as the focus on ESG issues increase,” and likely will continue to increase ahead of regulatory efforts, such as the impending release of the updated Green Guides by the Federal Trade Commission.
Sylvester specifically pointed to companies’ use of climate-specific claims, including their marketing of themselves and/or their products as “carbon neutral,” “net zero,” etc., as well as interest among consumers in eco-friendly products and services, as driving some of the legal squabbles that have landed before courts in recent years. But beyond claims that companies are making to cater to climate-conscious consumers, Sylvester noted the failure by companies to disclose material ESG risks is giving rise to shareholder-initiated litigation, specifically, stemming from companies’ failure to provide adequate disclosures of the “environmental liabilities, supply chain risks, labor issues or climate change related risks” that come hand-in-hand with their operations.
And speaking of ESG risk reporting, there is an interesting nexus here with artificial intelligence that is worth paying attention to. As AI, and generative AI, in particular, continues to pay an increasingly larger role in the workings of companies across industries, the issue of risk – and risk reporting – is becoming a topic of interest and importance.
