ESG and Climate Litigation Risks

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Bloomberg Law has released a new report on ESG-related liability, analyzing 17 pending lawsuits along with current regulatory/enforcement activities, and the potential implications for corporate legal departments.

The report looks at four key areas of potential liability: environmental marketing, and how state courts are interpreting the Federal Trade Commission's "Green Guides"; emissions reporting, which looks at pending cases on whether carbon-intensive companies have misrepresented their greenhouse gas footprint; financial investment decisions, which reviews pending cases against companies, states and plan administrators for their inclusion of ESG metrics in investment decision-making; and voluntary ESG and sustainability reports, which looks at securities litigation and the potential for courts to weigh representations made outside of SEC filings.

Analysis of the issues and pending cases is available here:

Last October, a report from Gallagher Re highlighted a wave of climate change litigation and the need for (re)insurers to assess the impact on their portfolios and risk profiles. The report found that litigation that was previously focused on governments and high-profile carbon intensive industrial sectors - such as the successful legal action against Shell - is now spreading to a larger swatch of companies - for example, where greenwashing claims may apply across a wide swatch of businesses and industries.

Climate activists seeking to set precedent and drive broader change are looking to involve third-party litigation funders and test new legal arguments, such as climate litigation brought under existing anti-racketeering laws.

While climate litigation has had limited success in courts to-date, insurers must monitor a growing number of cases that could set important legal precedents for how companies and directors may be held liable for climate related damages or failure to disclose risks and impacts - and how such legal actions could drive Directors & Officers (D&O) or Errors & Omissions (E&O) claims, and related disputes with insurers over coverage terms and exclusions.

As of March 8th, 2024 the Sabin Center for Climate Change Law at Columbia University was tracking 1,725 cases filed in the United States and 1,006 filed in all other jurisdictions combined.

Sources: Bloomberg Law, | Columbia University,