S4 EP3 | Undisputed: Navigating the ESG risk landscape in Canada
As regulatory requirements around climate and other Environmental Social and Governance (ESG) disclosures take shape and anti-ESG sentiment grows, organizations are increasingly finding themselves navigating a complex risk landscape.
From our survey:
- Issues surrounding board governance, executive compensation, conflict of interest and proxy battles have been flagged by 50% of Canadian survey respondents as something to pay attention to in 2024
- One in 10 respondents experienced ESG-related litigation last year (compared to just two percent in 2022) – a development we anticipated in our 2023 report.
- 38% of organizations are also concerned about future ESG class actions as issues such as greenwashing, diversity policies and regulatory compliance go under the microscope.
In episode three of our miniseries, hosts Ted Brook and Erin Brown draw on the expertise of Alison Babbitt, Partner, Canadian Co-Head of Responsible Business and Sustainability, and Heidi Reinhart, Partner. Together, they explore the discourse around ESG litigation risk as new regulations and policies come to the forefront. We’ll learn how various industries are impacted and why a strong base of corporate governance, transparency, and consistency can set businesses up for success.
Download the full Litigation Trends Survey at 2024 Annual Litigation Trends Survey.
This episode is accredited 0.62 substantive hours in Ontario and 0.5 substantive hours in British Columbia.
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Transcript
[00:00:02] Ted Brook Welcome to Undisputed, a Norton Rose Fulbright podcast. I'm Ted Brook.
[00:00:08] Erin Brown And I'm Erin Brown.
[00:00:09] Ted Brook We're excited to be hosting this special mini series to unpack the findings of our firm's annual litigation trends report for 19 years. Our firm's research has tracked changes and trends defining the litigation landscape from dispute types and exposure to litigation preparedness and in-house legal staffing by surveying legal professionals at organizations of all sizes across key commercial sectors in Canada and the US.
[00:00:37] Erin Brown In Undisputed, we'll explore the emerging trends and insights concerning the litigation challenges industry leaders are facing in 2024. Hope you enjoy.
[00:00:53] Ted Brook Hello everyone. Welcome back to Undisputed. Today we are talking about ESG risk and litigation. So that's environmental, social and governance risk. And we're joined Erin and I by Alison Babbitt and Heidi Reinhart.
[00:01:09] Erin Brown Alison Heidi, welcome to the show.
[00:01:11] Heidi Reinhart Hi there.
[00:01:12] Alison Babbitt Hi, guys.
[00:01:13] Erin Brown Alison is a partner at Norton Rose Fulbright and co-head of our Canadian responsible business and sustainability practice. Alison is based in our Ottawa office, which is great for me because I get to see her all the time. And Heidi is a partner and a key member of our Canadian Special Situations team, which focuses on shareholder, activist and defense mandates as well as complex and contested transactions, and is based in Toronto.
[00:01:37] Ted Brook We're excited. Welcome to our little virtual studio. Alison, why don't you start us off by telling us just a little bit about yourself and a little bit about the firm's responsible business and sustainability practice, what that means, and sort of what sort of lawyers fit within that team.
[00:01:56] Alison Babbitt Great question, because the ESG aspect of it isn't an obvious one. For me, just to give you a little bit of background on me. I am a projects lawyer, and so I assist clients in all nature of matters in the renewables, clean tech and mining industries. So that's really where I focus the bulk of my time. And with my role as co-head of our Responsible Business and Sustainability team. I'm also dealing with a number of ESG related mandates. It's really important to understand that our ESG or sustainability team is a global team, and it it's really important that I think that's the basis on which we approach the types of advice that we give, because these types of risks are very global in nature and apply globally to clients all over the world. We have folks that deal in this from a regulatory perspective, from a corporate commercial perspective, from a banking and financial institutions perspective. Obviously, human rights is a huge component of this. We have securities matters that come to the fore in the ESG space as well, and of course, very much subject matter close to your heart and Erin's heart. Litigation risk is also a huge part of the ESG story. And so we have a number of practitioners very active in that space as well.
[00:03:16] Ted Brook Just to pick up on that, Alison, like, you're not a litigation lawyer yourself, but we wanted to speak to you about ESG because it is, for me, one of those practice areas where there's so much going on geographically, so globally things are connected, but then also practice groups. The issues that our clients are dealing with don't squarely fit within the scope of one specific type of service without spillover.
[00:03:40] Alison Babbitt I think that's exactly right. And I always find it interesting when we get asked the question, how many ESG lawyers do you have? And I always say, we have 4000 lawyers in the firm. And so we have about 4000 ESG lawyers, because really, we all have our own individual practice areas where we we're dealing with day to day and ESG touches on really almost all of them. And I think that's part of the key for us as a global firm, not only do we have this expertise across the whole of Canada, but to the extent we have clients who have an interest or an issue in, say, in AMEA, then we also have the same skill set and complement of lawyers in that jurisdiction as well, and other parts of the globe.
[00:04:24] Erin Brown That's so interesting, Alison, and I think you hit the nail on the head when you said we all touch this a little bit. And on that note, Heidi, you also do a lot of work in the ESG space, but from a completely different angle. So can you tell us a little bit about your special situations practice and how that touches the ESG landscape?
[00:04:42] Heidi Reinhart Sure. So my practice is corporate securities, generally speaking. And then ESG shows up in our special situations work where you've got shareholder proposals being made to companies. I see it in the day to day life of a public company in terms of what it discloses. And again, maybe the risk associated with those disclosures from a regulatory perspective, class action perspective. I think, as Alison said, this issue is a global issue in Canada in some respects, is not as far along as some other jurisdictions. So I think the potential for litigation or regulatory consequences is just being felt out. We're sort of getting a sense of where those things might be going. So for me, companies are asking, how do I make sure I protect against that? What rules do I have to follow? What happens if I'm operating in different jurisdictions? How do I make sure people are buying into what I'm saying and it and I'm saying the right things, and then you get into the E and the S and the G part of it, which we're seeing growth really in the environmental area in terms of regulatory requirements. But the social's been around already for a bit, and I think people sometimes forget that, that we public companies disclose about diversity. Gender-based diversity in particular. And the governance piece is something we do as well. Where what is your board? What's its process to make decisions? How is it engaging and shareholders? So as much as this is a new issue, it's something we've already been helping companies with in ways they may not even realize.
[00:06:10] Ted Brook And so picking up on that, how do you say that Canada. It's becoming more of a or maybe you said it was a little bit behind some of some other jurisdictions in the development was an issue for public companies also. It's a kind of a practice area for people doing work in that space. It's a nice segue to the report, because one of the things that jumped out for me in the 2024 Litigation Trend Survey was this pretty strong finding that ESG issues are a growing litigation concern for in-house counsel. One in 10 respondents experience some type of ESG related risk or problem last year, compared to just two percent reporting in 2022. That's a big jump. I'm just curious. I'll throw it over to to you or Alison. Is that growing concern identified in the report consistent with what you're seeing or your teams are seeing in 2023 and so far in 2024?
[00:07:11] Heidi Reinhart Yeah, I'm happy to start and then have Alison jump in. So yes, I think council in house council is paying attention to the risk here and what might be a growing risk in terms of litigation. And I think that's because we see this sort of move towards creating regulatory regime or rigor around this. To get ahead of that, I think people are trying to anticipate what are we already disclosing and how do we make sure that is accurate. We know the regulators are looking at this, and if regulators are looking at it, shareholders are looking at it and there's a risk there. Did you have adequate disclosure or did you have misrepresentations. And we've seen we're already seeing a bit in Canada that certain people are trying to bring those claims. Then it doesn't have to be public companies either. Any disclosure you're putting out there is a company I think people are now looking at closely. Is that your advertising? There's the greenwashing concept of where an ESG aware company, we're making these commitments, but are you actually carrying out those commitments or is that was that just use promotional purposes? Diversity washing is the same concept. Like we're committed to having diverse workforces. But what are you doing to make that happen? You can't put claims out there if they're not true. So I see a real focus of council to pay attention to these issues, because I think we're building towards people starting to say we have to hold you accountable for what you're saying.
[00:08:38] Alison Babbitt Yeah, and I completely agree with that. I think one of the key areas where I think we're seeing a lot more movement clients asking questions is also just really in relation to the more developed European standards for disclosure that have been very much in the press of late. There has been quite a bit of movement with the CSRD and the CS3D, and some folks on this podcast may be saying, why are you guys talking about European standards for a Canadian company? What does that have to do with anything? But they do have some extraterritorial reach, and it may impact Canadian companies who have that nexus to the EU. We have had clients reaching out and saying, can you help us join the dots? Are we caught? What do we do? And of course, fortunately we have our colleagues and AMEA here able to assist with that. And I think that type of growing body of change in the EU is really starting to move the dial somewhat in North America and particularly in Canada, as Heidi says, we're seeing much more of that movement towards broader disclosure, more transparent disclosure and consistent disclosure across the globe, and also moving from that voluntary model into a mandatory model. I think the other place that we are, as I look at this more globally and I look at it as a horizon scanning exercise, what I'm hearing from our global litigation colleagues is that we're definitely seeing an uptick in some of those novel claims as novel ESG claims. And we've all seen some of the successes, particularly from the Dutch courts, that have been quite high profile. And really, it remains to be seen whether those lower court decisions will make their way into higher courts. But certainly with that uptick in litigation we're seeing globally and NGOs and other parties willing to take forward these types of actions.
[00:10:41] Erin Brown That's so interesting, Alison. And I think there's so much to unpack in what you just said. I'm excited to unpack it as the conversation evolves. But you talked a lot about the EU and how there's a lot of trends in terms of reporting obligations and also some cases that are happening in Europe. Where does Canada fit into that trend?
[00:11:01] Alison Babbitt The anti-ESG sentiment I think we're all talking about here is some of that regulatory pushback. We've seen it in the US in certain states in the US certainly how one determines financial risk for investments and whether or not ESG should be a factor in that determination. And I think we're seeing less of that anti-ESG sentiment in Canada, at least from a regulatory perspective. I don't think we're seeing that same pushback. And there may be pockets of that sentiment in parts of the country depending on industry type. But from a regulatory perspective, what we're seeing is we're really seeing that move from the more voluntary disclosure regimes and the voluntary guidance like TCFD and the like moving into that more mandatory disclosure type in a way that we hadn't seen before. And modern slavery is another good example of that, where we've moved into a mandatory disclosure regime, really a mandatory reporting regime. And that's truly part of Canada responding to the international commitments that it has made. So I expect that trend will continue.
[00:12:20] Ted Brook Alison, so far, I've counted three acronyms from you so far that I had no idea what they mean. Latest one was TF's, TF. I don't want to quiz you on it, or even necessarily what they all mean, but at a high level, is it fair to say that the acronyms are shifting from a sort of voluntary buy-in sort of regulatory requirements base in Canada towards what I understood, you say, to be a more mandatory regime, more akin to what maybe AMEA has had.
[00:12:50] Erin Brown And speaking of acronyms, AMEA, it's one that may not.
[00:12:56] Ted Brook Everyone knows AMEA. Do they? Europe should have said Europe, I don't know.
[00:13:00] Erin Brown Listeners, can you please, Ted, if you don't know what AMEA means?
[00:13:03] Ted Brook And like a good portion of the world, in addition. Yeah.
[00:13:06] Erin Brown Middle Eastern Africa. Yeah.
[00:13:08] Alison Babbitt As we look at ESG and sustainability from a North American perspective, it's certainly very clear that in Europe, regulators are further ahead than where we are. And there's been a lot of push from a year to point perspective to ensure that the energy transition and to help businesses maintain a level of disclosure that is fair and transparent and similar across the board. And so over time, that has we started with voluntary disclosure, like the TCFD task force and climate related disclosures, and that has moved into a regime which has become much more mandatory in nature from a European perspective. So as we move that over to Canada, in Canada, from a disclosure perspective, we're certainly living in a world right now where we're relying on voluntary regimes for the most part. There are some required disclosures from a materiality perspective for public companies. But in terms of actual ESG mandatory disclosures, these don't exist right now. But we're starting to see a move towards that. And so as not to throw any more acronyms at you, safe to say that globally, I think we're trying to move towards a set of standards where everyone can rely. And so we have a set of compliant, fair standards where everyone will follow so that your stakeholder, your investor, doesn't need to guess what each different standard means. We're trying to move to a place where we are complying with the same set of standards. And so necessarily that means that a mandatory regime is likely to come. And I think we're seeing some movement on that in Canada right now.
[00:15:09] Ted Brook Interesting. And I imagine that a double-edged sword. On one hand, you have some mandatory requirements under under jurisdictions with standards like that. But the uniformity could create certainty. And at least you know what the landscape is going to be. Heidi, do you have any thoughts on the sort of anti-ESG findings in the report, and whether they have been popping up at all in the Canadian side border in Canada?
[00:15:35] Heidi Reinhart I mean, we're a different culture from the states, where I think you see a lot more of some of this litigation on the people challenging what might be affirmative action policies and things of that nature. I think in Canada, I wouldn't call our anti-ESG movement to consider it to be as strong as maybe you see in some other places, but I think we've got maybe more of what I would call an ESG questioning or desire to say, is this effective? Does this work for our Canadian landscape? So, for example, our regulators are trying to introduce generic or general disclosure requirements for public companies, and they put it out for comment, whether it's climate related. They've recently proposed diversity related disclosure requirements. And I think what we're seeing is a healthy sort of back and forth with the regulators to say, does this make sense in the Canadian landscape? Is this going to be good disclosure? Is this worth while disclosure? And a lot of it is disclosure based as opposed to like quota based or to create an obligation to do certain things. But I do think there's a bit of a push and pull to say, are we thinking about what this really means for a company? And I think that's a bit more of the Canadian approach.
[00:16:51] Ted Brook And how do you do, I don't know, have you seen characteristics of companies involved in this, this push and pull? Is it issuers questioning the value or is it activists or special vehicle sort of stakeholders that are getting involved?
[00:17:07] Heidi Reinhart Yeah, that's a great question. I think it's both. We've got a wide range of companies here in Canada, you've got your bigger companies that attract institutional investors. Institutional investors are more likely to want this information and use this information when they do an investment, whereas maybe a smaller company isn't attracting that capital and might say, this doesn't make sense for me. I don't have this in my industry. This will become a challenge for me. So we are seeing sort of a difference between who embraces some of this and maybe who says, does this actually make sense? And I think on that investor piece, that's where we might see some challenges arising as well, where people have an investment thesis based on ESG related criteria. And there may be investors within that investment entity that say, well, where's the return? Like, do these criteria translate into what you're saying it should? And if it did it, why not? And if you're taking sort of my investment money, you know, most people want to make sure that money is put to good use and turns into a return. So I think all these things will get fleshed out as we as this sort of develops, to say again, this almost goes back to the greenwashing. Like you can have these criteria, these philosophies, but if they're not performing, at what point do you sort of revisit them?
[00:18:30] Erin Brown And Heidi, we've talked a lot about ESG as sort of a nice termed to reflect the three different groups, but they are distinct things. And the Litigation Trends Survey broke down, where specifically in-house counsel are seeing the most potential and it flows by the order of the acronym. So environmental is the biggest area expected to drive disputes followed by social followed by governance. Is that and like quite quite a significant disparity, 71 percent for environmental down to 26 percent for governance. Is that reflective of what you're seeing as well?
[00:19:02] Heidi Reinhart I certainly think there's a focus on environmental right now in climate. I think to some extent, maybe more so than the S and maybe more so than the G. There's a bit of a tangibility to the E, like, you can measure things, you can report data and numbers. It's a little bit easier for people to wrap their heads around. I'm going to get down to this level of emissions in 20 years. Did you or didn't you? Are you on the path to doing that? I think people find that a little bit easier to digest, which also then makes it a little bit riskier that people can look at your own information and say, you said this, and I'm not seeing that translate into something. I'm challenging now on that.
[00:19:39] Erin Brown And that's super interesting because I practice a lot in the space of competition, and we're definitely seeing movement on greenwashing. We've seen a lot of greenwashing cases by the Competition Bureau and Investigations over the last couple of years on things like whether coffee pods are actually recyclable in the way that they've said they are. But what's really interesting is there are some proposed changes coming down the pipe not yet implemented, not yet received royal assent that would actually add a specific pro a specific provision to the competition act on making claims to the public on the environmental and ecological effects of climate change, and specifically whether that's backed up by an adequate and proper test. And then as part of the changes, we're also seeing an ability for increased private applications to the Competition Tribunal to challenge. So, you know, in the past, the Competition Bureau would be the one leading investigations. And we're more and more seeing this ability for private applicants to actually directly challenge from a sort of deceptive marketing standpoint. So I think what I'm seeing in my practice, to our point earlier about how we're all doing a part of this. ESG is really following the trends that you're both talking about, that we're seeing increased provisions from regulators, increased focus on the E, particularly in ESG, and a lot around the environmental and ecological effects specifically.
[00:21:01] Heidi Reinhart On that actually brings up something I think Alison and I were chatting about before, which is that to your point about maybe creating this new private, right, like there are new avenues, I think, that are coming up for people to make complaints or to bring an issue just to someone's attention to maybe do something about it. And Alison, I forget the name of the ombudsman, but you were mentioning there's a sort of another role that oversees these things or provides a way for someone to raise in a complaint. And I think that is another challenge for companies because the landscape is evolving. And we I think you're right there. There could be new ways all the time that someone can, can come after you for what you've said or done. And, I think that you have to keep a, you know, keep an eye on that as well.
[00:21:49] Erin Brown Is that the Canadian Ombudsperson for Responsible Enterprise, maybe that you were.
[00:21:52] Alison Babbitt Yeah. Yeah, exactly. We were just having a conversation about that earlier, just to Heidi's point that as much as that that ombuds office arguably like some teeth because they're really they don't have enforcement powers per se.
[00:22:10] Ted Brook That's exactly what I was gonna ask. Okay.
[00:22:11] Alison Babbitt And just to explain the CORE, the Canadian Ombudsperson for Responsible Enterprise.
[00:22:17] Erin Brown Another acronym.
[00:22:17] Alison Babbitt Another acronym. Just to keep you on your toes. They review complaints about potential or possible human rights abuses that are alleged to have been done by Canadian companies outside of Canada. They focus actually on three core industries, so garments, textiles, mining and then oil and gas. And so it allows individuals, corporations to make a complaint, to say, we think there has been some forced labor in that particular area. The CORE then has an opportunity to investigate that businesses can participate in that or not participate in that as they wish. But at the end of the day, if a resolution cannot be found to the particular issue at hand, then there is a huge reputational risk for a company receiving not only a complaint of this type of forced labor or human rights abuse, but also if they've been found to be a violator, then reputationally, that's hugely damaging for them. And then, of course, there's the potential for litigation that might flow from that. So as much as an organization, it may look like some pirate to really do much in relation to the types of decisions that it makes. It's certainly an area, I think, where companies who have operations outside of Canada and those core industries are taking some notice.
[00:23:49] Erin Brown Yeah. And my head was going to the exact place that yours was, Alison. And that even if this doesn't have teeth, from what we would traditionally refer to in an enforcement perspective, this could well be what's keeping guys up at night because of the potential for reputational harm to the business.
[00:24:05] Heidi Reinhart And maybe just to add to that, some of these are all just strings to that people start to tug on. And if you are an activist looking at a company, this becomes the fodder to say, okay, maybe the ombudsman isn't going to bring a billion dollar claim against someone, but activists will look for any means to say, this builds our case, that this company has a problem. And I think that just adds to this.
[00:24:28] Ted Brook Questioning judgment of management in the board, because.
[00:24:31] Heidi Reinhart Exactly. It's a little bit of a waterfall effect that we've found in issues.
[00:24:34] Ted Brook Interesting. So environmental is big. I think it's front of mind for a lot of of the respondents. Certainly a lot of the public is just more aware of the sort of novel lawsuits that Alison's referred to. And the impacts of climate change are front of mind for a lot of people. But the S in ESG just want to pause there for a moment and see if you could offer any insights as to what those sorts of risks look like.
[00:25:01] Alison Babbitt You know, when we talk about this social risk, I actually think a lot of a lot of folks just say, what does that even mean? And to Heidi's point, the social aspects of this have been around for a long time. We've been talking about diversity for for decades, and what that looks like from a board perspective for public companies and a diversity of women on the board. And I think as a country, we have a history of trying to protect human rights that apply to all of us and all of our businesses. We're protecting the rights of workers based on the Canadian legislation that's out there, making sure people have safe working conditions. They have the ability to take breaks and go home at night. There's already a lot of legislation that's in place to protect that. I think during Covid, necessarily, there was a lot more rhetoric around social risk and social rights and that, I think that term social risk became a bit more known during that time, and people became a lot more aware of the type of social pressures and social risks that we have. In Canada right now, obviously, the modern slavery risk and this idea of protecting against forced and child labor is just very front and center right now because of a new piece of legislation that was enacted and came into force on the 1st of January this year, and that is requiring businesses who meet the test, at least for the act, to have to report on the type of what we describe as modern slavery risks, versus it's a risk of child and forced labor in their supply chains, and reporting on the type of risk mitigation that they take. In an effort to eradicate at least reduce or mitigate that risk, not just in Canada but globally. So I do think we're seeing much more emphasis given on certain social risks. We maybe just don't call them that.
[00:27:10] Erin Brown And that goes along as well with our discussion of core, right, and looking at responsible business throughout the supply chain. And Heidi, and maybe this is a question more for you, but what about the G.
[00:27:19] Heidi Reinhart Yeah, I think it is a little bit of really trying to understand risks, which is always can be a challenge for the board and for management in terms of paying attention to things that may have been around for a while, like climate. But how does that impact our business? And how does the idea that there could be an actual financial outcome from something? So I'm thinking about things like we've seen different weather patterns and how does that impact your business if there's a likelihood of flooding somewhere? It's a challenge for boards sometimes to understand these issues because they can be complex. I think the G one is really just about trying to stay on top of stuff and be open to knowing what you need to know about this. Maybe you don't know exactly what that means, but like trying to figure out how to respond to it.
[00:28:06] Erin Brown And then before we talk a little bit more about how to be prepared, the litigation trend survey also breaks down concern areas by sector. And obviously energy has ranked ESG as a primary concern for obvious reasons. But one that's a little bit less obvious, maybe, is financial services. Is there something specific to financial services that would be driving an increased ESG focus moving forward? And this could be in the US or Canada? Maybe this is a more of a US specific trend, but is there anything in the financial services sector specifically happening around ESG that you think may be driving that industry specifically to be a little bit, have these concerns more front of mind?
[00:28:45] Heidi Reinhart I think a lot of it is that activists have been turning their sights on financial institutions for a funding perspective. So who how are you deploying your capital? Where is that going? I think that's a part of that. Now focus on the financial services industry. So it may not be their own particular business like in terms of what they themselves do, but what their clients are doing, which is almost akin a bit to the modern slavery approach now, where are you doing business with and coming at it from that perspective?
[00:29:14] Ted Brook That makes sense. And also a highly regulated industry and an industry where statements and representations and reporting happens, enormous amount happens. Right? So one of my takeaways from this conversation is that there's increased pressure, whether it's pressure from consumers or pressure from regulators to make statements and to report about ESG matters. But then that also carries risk. If you're not doing what you're saying you intend to do, or if you're not measuring how you're going about doing it.
[00:29:45] Erin Brown I think that's a really nice way of summarizing some of the things that we've talked about, Ted.
[00:29:49] Ted Brook So what do we do, Alison, Heidi, if you with general counsel comes to you, they're losing sleep because their management is saying, what's our ESG plan? How are you managing risks? Is there any sort of guidance or I don't know, like standardized directions that you can turn to at least find some comfort? We are doing x, y, z and it may not be perfect, but it's a start.
[00:30:16] Alison Babbitt I think the start is picking up the phone to us. And Heidi talked about the governance side of things, starting with that framework of how do I feel about these risks? What is my what is my business? See as the risks. What do I want to do about it, and what's my stand? And understanding what your framework is. What your appetite for risk is really important. So once you've made that that policy, you've delivered that message. It's then a somewhat easier task to then determine, okay, who's going to be responsible for each individual risk, whose responsibility is it going to be to manage that, to ensure that whatever our policy is, gets dropped down to the right teams and is managed in the appropriate way, is monitored in the appropriate way, is audited in the appropriate way, and ensuring that information can make its way back up to the board so they have the information to make the key decisions that they have. So for me, it really starts with that very strong governance piece will start a business in good stead to then be nimble, to be able to respond to the issues that come along. Once you have that framework, it's a case of working through what risks are in your business, what mitigation steps make sense for you as a business? What do you see as a risk coming down the pipe? What's that horizon scanning looking like? Because I'm sure GC is all across the country, a huge part of the role is seeing what's coming next. How can I best protect the business on a goal forward basis? And if you can be ready and have the governance structure, the tools and the people that you need to help you in place, that that makes you much more nimble to be able to really cater to those risk factors as they come along.
[00:32:24] Ted Brook There's no silver bullet, right? It's not like here is the program that I implement because it depends on your business, your industry, your market, your past practice. I don't know, Heidi. Any other words of wisdom you would throw in?
[00:32:36] Heidi Reinhart Well, I was just some thinking along those lines. I have sympathy for GC because this is a complex area, and I think that certainly from a disclosure sort of regulatory perspective, when things are changing and evolving and rules have and come into effect, but you're already disclosing things that can be a challenge. But I think to your point, I would also say to clients and companies, don't be too hard on yourself. Like it doesn't have to be perfection. I think a lot of times even the regulators have said try and be reason like, at least get going, get going, and it can evolve as much as the landscape is evolving. Compliance can be evolving as well. So I think allow for that and also look for the opportunity. Like I think a lot of this we're talking about risk. But sometimes these are opportunities too. And there can be just simple things that you can do as an organization to maybe promote an element of ESG. And as Alison said, you can call us and we can talk to you about that as well. But just don't be afraid to just start and kind of see where where it takes you.
[00:33:38] Erin Brown Doing something is often better than doing nothing.
[00:33:41] Heidi Reinhart Yeah.
[00:33:41] Erin Brown I think you also made a point, Heidi, in one of our discussions before the recording about being consistent.
[00:33:48] Heidi Reinhart I do think exactly as we're figuring out what the landscape looks like from a disclosure regulatory perspective, I think it doesn't hurt even now to be looking internally and creating controls and processes to say we do want our messaging to be consistent. You want to make sure that I think internally you've got some checks and balances to say. Do we know what we're saying? Have we checked what we're saying? Are we saying the same?
[00:34:13] Ted Brook Awesome. Thank you, Alison, and thank you Heidi. This has been a great conversation, and it's a topic that I care about because I deal a little bit with the E of ESG and some of my environmental litigation and contamination cases, but I don't get to see the full picture very often because I'm just focused in that single lane. But I appreciated this.
[00:34:35] Erin Brown Yeah. And I think we probably just scratched the surface of all of the potential ESG stuff out there. But it was a very interesting discussion and learning about what you're seeing, especially for us as litigators, to see what our business colleagues are seeing on the horizon, I think can help us to prepare for what litigation may come out of some of those things. So thank you both for taking the time to chat with us today.
[00:34:55] Alison Babbitt Thanks for having us on, guys.
[00:34:56] Heidi Reinhart A lot of fun. Thank you.
[00:35:01] Ted Brook Here's what I'm taking from ESG is like, you won't get in trouble for what you don't say, but now you have to say things. And so people are getting in trouble and there's more risk. And I think it's a good thing, right? I think that in a lot of sectors, mandatory or at least standardized, even if not mandatory reporting requirements can make sense because it creates some certainty, it creates some consistency to this is what we have to do. It's not a guessing game. We're not trying to play to consumers or play to markets. We're making particular statements and we're doing particular investigations, and then we're measuring how we're accomplishing those goals.
[00:35:43] Erin Brown And I think the other point for me is accuracy and to highest point consistency. If you take the modern slavery reporting legislation, for example, the real thing right now is just be accurate. Don't try to be aspirational and say something that you're not doing. You just have to be reporting on what you're doing. You could theoretically say, I haven't done anything and they can't do anything about that at this point. But the point is that the bigger consequence legally would come from saying something inaccurate than saying nothing at all. And same with the greenwashing. Like once you say something, it has to be accurate. So I agree, I think that is the takeaway of this discussion is like accuracy and consistency. Make sure that what you're saying is accurate. If you're going to say something, if you have to say something, or if you want to say something because you want to promote a certain aspect of your product, just really make sure that it is accurate and be consistent in the way that you describe it in your advertising materials and your disclosure. Yeah. So I think, accuracy.
[00:36:38] Ted Brook I'm going to add some, accuracy, consistency but then timeliness. So revisit your statements. Right. If you've said something seven years ago about your carbon footprint reduction plan, are you revisiting it. Just maybe it's not. If it's no longer accurate.
[00:36:53] Erin Brown Yeah. If he's mid 2030 and then a whole bunch of stumbling blocks came up. Yeah, you're still out there.
[00:36:59] Ted Brook You know, if that just plays into accuracy. So I think that you're right. Accuracy and consistency lessons for today, I like it and I appreciate it. Both Heidi and Alison talking illuminating the G of ESG for me a little bit. Right. More with the framework. Identifying teams, having monitoring, reporting, auditing, responsibility delineated for all aspects of your business. And then that makes you like more nimble, effective organization for responding on these issues. And that was a fantastic conversation. What are we doing next? We've done the report at a high level with FDP. We did cybersecurity with Imran.
[00:37:39] Erin Brown And John and Imran.
[00:37:40] Ted Brook And ESG.
[00:37:41] Erin Brown I think that, you know, Heidi's conversation around securities and special situations. I think I think that's an area where maybe need to dive into a little bit more because I think, you know, it's something that we often see as being less of a litigation topic. But I think I think there's a lot happening, a lot happening there. And we need to, I think we should do our fourth episode on that.
[00:38:03] Ted Brook I agree. Yeah.
[00:38:07] Erin Brown Thank you for listening to Undisputed, Undisputed spinoff. To learn more and download our 2024 Litigation Trends survey, visit LitigationTrends.com, or visit the link in our show notes.
[00:38:21] Ted Brook And you can subscribe to Undisputed on Apple Podcasts, Spotify, or wherever you get your podcasts currently so that you won't miss any of our episodes.
