Managing ESG disputes risks in Africa

ESG-related disputes are rising all around the world, and Africa is no exception. Although one of the most well-known risks relates to greenwashing - where a company is alleged to have overstated their ESG credentials - there are many other ways in which companies, particularly investors in Africa, may face potential ESG litigation risks. In the video, Stuart Neely says that it is important not only to understand the sources of these claims, but also who the potential claimants might be.

Stuart highlights contractual claims since ESG requirements are routinely included in documents between financiers and sponsors, including in joint venture agreements, development agreements and EPC (engineering, procurement & construction) contracts. He also points to potential claims by those who might allege that their rights have been impacted, for example workers or members of the local community.

In the UK, there has been a rise in parent company liability issues, and Stuart and Ruth discuss the key principles that have emerged from these type of cases. A recent finding by the UK Supreme Court, that a parent company can owe a duty of care in respect of its subsidiaries actions, is particularly important from an African perspective, because many African jurisdictions are common law countries, where English law is persuasive.

Finally, we look at the emergence of mandatory due diligence laws, something that European companies investing in Africa should consider.