Remember Trevor Milton, founder and former CEO of EV manufacturer Nikola? He was just sentenced to four years in prison for lying to investors about the company’s EV and hydrogen technology, according to Reuters. If you need a refresher on the case, Zach wrote up a short breakdown last year and a followup afterwards. This case shows the potential criminal side of greenwashing and allowing corporate sustainability messaging to be issued outside of internal controls. As Zach said:
“This illustrates the importance of consistency and validity of ESG messaging regardless of where/how such statements are made. While we may not soon see again criminal charges as flagrant as these, civil penalties and investigations are within the realm of possibility. Whether it’s the SEC’s Climate Taskforce or NGOs looking for strategic targets, plaintiffs and regulators are looking for inconsistencies in company messaging, especially when it comes to ESG. Companies should have strong governance mechanisms in place to ensure that ESG communications are consistent and valid, especially for companies that rely extensively on marketing departments for these topics.”
The pressures haven’t lessened in the past year, nor will they anytime soon. Milton is now in a club no CEO or founder wants to join, but he almost certainly won’t be the last. As we begin a new year, it is a good time to remind executives (and managers/staff as well, frankly) that external communications about product or company sustainability, climate status, DEI or other ESG matters must be vetted internally before being made public. This includes informal communication venues such as posts in social media, an area of particular risk – and a prosecutor’s evidence treasure trove.
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