ESG & Litigation: Where will greenwashing go now?
15 Jul 2022
In this article, DRD Partner, Lawrence Dore, discusses the ways in which ESG might develop in an atmosphere of increasingly rigorous monitoring.
The arrival of COP26 in Glasgow last year led to global corporates scrambling to find an ESG announcement as their CEOs took to the podium. Largely, this movement has been a force for good, addressing some of the most profound challenges the planet and society faces and genuinely encouraging (and potentially forcing) companies to examine how they do business and what their impact is.
Businesses with ESG built into decision-making are de-risking – anticipating future challenges and future-proofing against environmental, regulatory and social change. Such businesses also demonstrate strong, long-sighted management and will, the argument goes, have strong governance.
The rise of greenwashing claims
Companies have scrambled to meet the demand for ESG credentials, but concerns are now arising that this information has been pushed out without proper due diligence and care, an alarming fact for stakeholders, urging regulators to take swift action.
In the past year, we have observed increasing headlines detailing greenwashing, including fake claims and data that cannot be trusted. The likes of Oatly and H&M have come under scrutiny and there has even been derision over Hellman’s mayonnaise being given a mission (classic Terry Smith!), and its not taken long for these cases to reach the courts.
In the past year, we have observed increasing headlines detailing greenwashing, including fake claims and data that cannot be trusted...and its not taken long for these cases to reach the courts.
Lawrence Dore, DRD Partner
The growth of ESG monitoring
The EU taxonomy has provided a push – EU companies with more than 500 employees are required to disclose both their transition away from carbon-emitting energy sources and, for those who sell financial products, disclose the impact of their investment on sustainable products.
The Competition and Markets Authority (CMA) also published its Green Claims Code in September 2021, meaning that any company that fails to abide by the code can be brought to court and, if found guilty, be required to pay redress to consumers. So where does this leave companies and those responsible for driving the ESG agenda internally?
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