ESG Disclosure through the Lens of Litigation

 

On September 15, 2022, McMillan Vantage and GRI co-hosted a discussion on the topic of trending litigation issues and new precedents in the ESG space with respect to public disclosure.

The speakers were Rebecca Boone, Hans Ek, John Rizio-Hamilton and Hannah Ross of Bernstein, Litowitz, Berger & Grossman LLP, a New York based law firm that specializes in ESG litigation.

It was a lively and wide ranging discussion.  The topics discussed included:

 That ESG is entering into the political arena

Typically when one thinks about ESG and shareholder activism, there is a tendency to think of shareholder activism  as a means by which shareholder use their power as owners to change corporate behaviour to be better from an Environmental, Social and Governance perspective.  A new trend is that ESG is becoming contested political ground in the United States.  Those in favour and opposed to ESG are making their presence felt not only at meetings of shareholders, but in the political arena as well.

There has been a notable backlash in the U.S. against ESG activism from state governments (e.g. Florida and Texas) as well as from some shareholders.  There has been a direct response by investors and state governments that support ESG initiatives. The contest between those who support and those who oppose ESG initiatives may have significant implications for both investors and public issuers who have ESG mandates and their strategies should take these factors into account.

The “S” in ESG is becoming increasingly important in the ESG litigation strategies of institutional investors

The seminar had a particular focus on how institutional investors are using litigation strategically to advance ESG issues.  ESG Litigation is increasingly being used by institutional investors to achieve specific outcomes as well as to obtain monetary damages. These cases demonstrate that the “S” in ESG is becoming more of a focus in litigation. Notable cases include First Energy, Fox News and Facebook/Meta.

ESG Disclosure Developments in the United States, Europe and Canada

From a European standpoint, the speakers  noted the following techniques are becoming best practices for corporations to substantiate their progress to the market: setting clear goals, following up on them, and having the results audited.  In so doing, issuers can demonstrate that they are not “greenwashing”.

ESG Disclosures are being focussed upon the Securities and Exchange Commission in the United States.  Given developments in Europe and in the United States, it is probable that Canadian regulatory authorities will develop regulatory standards in these areas.

 

Speakers:

Rebecca Boone
Partner, Bernstein Litowitz Berger & Grossmann LLP

 

 

Hannah Ross
Partner, Bernstein Litowitz Berger & Grossmann LLP in New

Hans Ek
Senior Advisor for European Relations, Bernstein Litowitz Berger & Grossmann LLP

 

 

Hugh O’Reilly
Executive in Residence, Global Risk Institute
Moderator

John Rizio-Hamilton
Partner, Bernstein Litowitz Berger & Grossmann LLP in New York