The US doesn’t lead in many ESG areas. When it comes to emissions trading, climate reporting, and supply chain management, the US regulatory scheme is lagging or nonexistent. However, the US does prevail in one major area: litigation. I wrote last month about how, despite slowing rates of climate litigation globally, the US held steady over 2024. With regulatory pullbacks in the EU, is it possible that more activist groups and citizens will turn to the courtroom? A recent memo from Taylor Wessing discusses the possibility of an incoming wave of ESG lawsuits in Germany and the EU:
“Recent developments should not be taken as an opportunity to write off ESG and underestimate the challenges and risks associated with it. Although there has not yet been a widespread wave of ESG lawsuits in Germany, various court proceedings show a clear trend: companies are increasingly facing legal challenges in the ESG area. The combination of regulatory requirements, growing activism and increasing public awareness is creating an environment in which ESG violations can become relevant not only in terms of reputation but also in terms of liability. This applies not just to individual areas or industries, but across all sectors and already under current law.”
A global wave of ESG litigation would raise risks across the board. However, significant obstacles remain. The US has a uniquely litigious culture, and private litigation isn’t as popular or accessible in other countries. Additionally, the memo cites causality, attribution, and the amount of damages claimed as problem areas for ESG plaintiffs.
Members who want to know more about climate litigation can check out our litigation subject area here. Additionally, for an overview of the various climate suits and how they may impact your company check out our Evaluating and Managing ESG Litigation Risks Guidebook
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