ESG litigation has been trending upward for years and shows no signs of slowing down in 2024. While still largely undeveloped, new cases are changing the landscape as more novel cases are brought. A recent survey from Baker McKenzie of roughly 2,300 professionals globally, many of whom are corporate lawyers, found that ESG is the top anticipated legal risk of 2024. The survey states:
“We also asked what types of disputes presented a risk to respondents’ organizations in 2024. ESG took the top spot, having continued its rise up the table for the past three years. Employment disputes now feature second in the global table, also a significant increase from previous years.”
A combined 73% of respondents reported ESG as a legal risk to their organization. Environmental and governance were the main two areas of concern with social trailing significantly. Employment issues came in second at 52%. The fact that ESG beat out employment, consumer/product quality, securities, and many other litigation areas by such a wide margin shows that the business imperative for managing ESG is undeniable. The regulatory landscape around ESG along with the growing body of case law from civil suits is substantially raising ESG litigation risk.
While the survey doesn’t break responses down by jurisdiction, I suspect that anti-ESG plays a role in these results as well. Unlike other areas, like tax, for instance, ESG litigation risks cannot be completely mitigated by following the letter of the law, because there is often no law to follow. Inversely there are sometimes multiple, contradictory laws that make reducing litigation risks difficult. In all the ambiguity, one thing is clear: ESG litigation isn’t going anywhere and 2024 is going to hold major developments. It has never been more important to understand the landscape and take measure to manage/reduce your company’s exposures. PracticalESG.com members have access to our Guidebook “Evaluating and Managing ESG Litigation Risks.”
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