ESG Litigation Guide

The Environmental, Social and Governance (ESG) litigation landscape in the UK is extremely broad and reflects a significant increase in the volume of ESG claims in recent years. 

At a domestic level, the UK government has faced several judicial review proceedings, predominantly by non-governmental organizations (NGOs) and environmental campaigners, in relation to decisions that are perceived to be inconsistent with its ESG goals and obligations.  On the corporate side, businesses have faced an array of ESG claims, including in relation to alleged product incompliance with ESG standards and related misrepresentations, poor employment practices, and bribery and corruption.  Directors too have faced litigation in respect of their management of ESG risks. The recent ICJ Advisory Opinion paves the way for further litigation against the UK government (and other States) for breaching climate change-related duties, and is likely to have indirect consequences for corporates too as more stringent measures are introduced to regulate their activities. 

Meanwhile at an international level, alleged environmental damage, social injustices and human rights breaches occurring abroad are being pulled into the UK litigation landscape, through claims being brought against UK-based parent companies in relation to the actions of their subsidiaries abroad, or the actions of third parties within their international supply chains. These claims often take the form of mass tort claims, using group litigation mechanisms available in the English Court.

From a practical perspective, ESG litigation in England is fuelled by active claimant law firms in the ESG space, group litigation mechanisms facilitating mass claims and litigation funders making claims more financially viable in certain circumstances.

Going forward we anticipate seeing a continuing rise in claims as investors and consumers increasingly attach value to, and purchase and invest in, products and companies with strong ESG credentials, and businesses have an increasing amount of regulation to comply with. This will make litigation more likely when businesses fail to perform as required or as promised and as activist shareholders look to hold businesses to account on ESG issues.  With increased pressure on corporates to make public ESG statements, whether due to increasing regulation around ESG disclosures or stakeholder and competitor influences, we expect to see an increasing number of “greenwashing” claims in particular. Further, in the longer term we expect to see claimants seeking to establish corporate liability for historic carbon emissions and obtain damages to cover climate impact and adaption costs, if hurdles such as causation and attribution of responsibility can be surmounted.