As the phenomenon of ESG-related litigation has developed and evolved in recent months, it has unfolded that the lawsuits are not, as was expected, being filed against ESG laggards, but instead are being filed against companies that were proactive on ESG-related issues. One of the cases illustrating this development is the securities lawsuit filed against the consumer products company Unilever, based on allegations that the company had failed to disclose a resolution passed by the independent board of its Ben and Jerry’s subsidiary to end ice cream sales in occupied Israeli territories. On August 29, 2023, In a ruling that suggests that these kinds of ESG-related cases could face challenges, Southern District of New York Judge Lorna Schofield granted the defendants’ motion to dismiss the lawsuit, on the grounds that the plaintiff had failed to sufficiently plead scienter. A copy of the August 29 opinion and order can be found here.


Ben & Jerry’s is a subsidiary of Unilever. When Unilever acquired Ben & Jerry’s, as part of the acquisition, Ben & Jerry’s was allowed to maintain an independent board of directors, while Unilever maintained operation and financial control of the unit. In July 2020, the B&J board decided not to renew its existing sales arrangements in Israel and to end sales of B&J ice cream in areas the B&J board considered to be Palestinian territories, illegally occupied by Israel.

The resolution was not immediately announced or implemented. Unilever instead set about to determine whether and how to implement the measure. Disagreement persisted between Unilever and the B&J board about implementing the resolution. The resolution was ultimately disclosed in July 2021, with Unilever issuing its own statement that sales of B&J products in Israel would continue. The share price of Unilever’s securities declined in July 2021, following the disclosure of the resolution and following negative reactions of the Israeli prime minister and others to what was perceived as an Israeli boycott. In June 2022, Unilever sold its B&J business interests in Israel to its local partner, with B&J ice cream to be sold under its Hebrew and Arabic names.

During the period between the adoption of the resolution and its disclosure, Unilever issued multiple public statements and financial filings that did not disclose the adoption of the resolution.

As discussed here, in June 2022, a plaintiff shareholder filed a purported securities class action lawsuit in the Southern District of New York against Unilever and certain of its directors and officers, alleging that the company had misled investors by failing to disclose the B&J board’s adoption of the resolution. The plaintiff’s alleged that the failure to disclose the resolution’s adoption misled investors about the operational, financial, and legal risks the company faced. The defendants filed a motion to dismiss.

The August 31, 2023, Opinion

In a short August 31, 2023, Judge Schofield granted the defendants’ motion to dismiss. In granting the defendants’ motion, Judge Schofield held that the complaint does not sufficiently plead scienter for any of the individual defendants.

The complaint’s scienter allegations focused on the individuals’ knowledge of the resolution and what the complaint attempted to characterize as their deliberately delayed disclosure. The plaintiff’s arguments, the court said, rest on the assumption that the resolution’s implementation was a certainty and known to the defendants to be so. Judge Schofield said that these allegations are “belied” by the complaint, which the Judge said shows that the defendants had no reason to believe that the resolution would be adopted or implemented in a way contrary to Unilever’s wishes and accordingly did not act with scienter in delaying the resolution.

Unless and until the defendants understood that the resolution would be implemented, the court said, defendants “cannot have acted with the requisite scienter in not disclosing a possible change in the business strategy and accompanying risks.” The most “cogent inference” from the allegations is that Unilever “delayed announcement of the Resolution to determine what, if anything, to do about it.”


As I noted at the time that this lawsuit was originally filed, this lawsuit seems to check both the “S” and the “G” boxes on the ESG panoply of issues. The “S” factor has to do with the B&J subsidiary’s independent board’s weighing in on politically and socially sensitive issues having to do with policies of the Israeli government. The “G” factor has to do with the fact that the B&J subsidiary had an independent board, believing itself to be empowered to weigh in on sensitive issues, potentially at cross-purposes to the business approach of the subsidiary’s corporate parent. As I also noted at the time, the lawsuit does show how a company’s proactive approach to ESG issues can translate into securities lawsuit. And the whole sequence of events does show what a broad range of issues the “S” factor in ESG can encompass.

The court’s grant of the dismissal motions does show that merely because a company becomes involved in controversial issues does not necessarily mean that the company has violated federal securities laws. Plaintiffs seeking to pursue securities claims based on proactive ESG policies and actions must still establish the basic elements required to state a securities claim. The court’s dismissal of this lawsuit arguably is an important development in the continuing evolution of the phenomenon of ESG-related litigation. Plaintiff’s lawyers’ interest in pursuing these kinds of claims could depend on how the claims that are filed actually fare. A poor track record could make these kinds of claims of less interest to the plaintiff’s attorneys. Whether and to what extent others of these ESG-related cases meet a fate similar to the outcome of this case could affect the likelihood for further litigation of this type.