Mitigating and managing contentious ESG risk, including greenwashing

Across almost every industry there is an accelerating trend towards a heightened risk of ESG related litigation and regulatory action, including increased regulatory, investor and consumer scrutiny of potential greenwashing. This can include corporate regulators taking enforcement action, shareholders suing in relation to corporate disclosures, commercial competitors seeking to protect their market position by suing to restrain greenwashing conduct or strategic litigation backed by activist groups. 

Greenwashing issues have reputation at their heart and knowing what claims can be made, how and why, and what practical steps can be taken to avoid them can mean the difference between a successful investment, project or campaign, or one deflected by regulators or competitor complaints. Organisations need to understand where they could be exposed to risk and ensure they have the right processes in place to avoid it.

To manage these risks, organisations can undertake actions such as ESG risk audits that not only examine what is currently required by regulators and investors, but also where they are likely to move in the future and what is acceptable in different industries.  Independent and transparent investigations are also a way of identifying weaknesses and proactively addressing them.  

Businesses and countries must be ready to deal with a range of ESG litigation risks in a rapidly evolving global context in a way that is cost effective and strategic. Identifying risk ahead of time is a critical step in doing so. 

Norton Rose Fulbright has a history of deep engagement with corporate regulators such as ASIC and the ACCC and also has great experience working with energy, mining and finance sectors where we have helped keep our clients connected with this rapidly changing and complex area. Our experience in cross border trade and supply chains, and investment structuring and arbitration also makes us ideally placed to assist companies to manage sovereign risk in a rapidly changing regulatory environment.

As one of the world’s largest law firms with a global footprint monitoring international developments across Europe, the Americas and Asia, we are uniquely positioned to be your partner and guide as you traverse this complex environment.