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When the SEC established a Climate and ESG Task Force in March 2021, the agency said that the group would “develop initiatives to proactively identify ESG-related misconduct.” Since that time the Task Force has indeed filed enforcement actions alleging ESG-related misrepresentations. Now the agency has reached a settlement with the Brazil-based mining company Vale, S.A. of the Task Force’s first-filed enforcement action, in connection with alleged misrepresentations in the company’s sustainability report about the safety of the company’s mining dams. In the settlement, the company agreed to pay a total of $55.9 million. The enforcement action and its settlement signify the agency’s increasing focus on ESG-related disclosure and its willingness to pursue enforcement actions using existing procedural mechanisms. A copy of the SEC’s March 28, 2023, press release about the Vale settlement can be found here.…

Continue Reading Mining Company Settles SEC’s ESG Task Force’s First-Ever Enforcement Action

In what it calls the “world’s first” of its type, the environmental advocacy group ClientEarth has filed a shareholder derivative action against the board of Shell plc, claiming that the company’s directors have failed to take sufficient steps to protect the company from the future impacts of climate change. The action seeks to compel the board to “strengthen its climate transition plans, in the best interests of the company in the long term.” A copy of ClientEarth’s February 9, 2023 press release about the new lawsuit can be found here. The group’s statement of FAQ’s can be found here.…

Continue Reading Advocacy Group Sues Shell’s Board for Insufficient Climate Change Action

The directors’ and officers’ liability environment is always changing, but 2022 was a particularly eventful year, with important consequences for the D&O insurance marketplace. The past year’s many developments also have significant implications for what may lie ahead in 2023 – and possibly for years to come.  I have set out below the Top Ten D&O Stories of 2022, with a focus on future implications. Please note that on Thursday, January 12, 2023 at 11:00 AM EST, my colleagues Marissa Streckfus, Chris Bertola, and I will be conducting a free, hour-long webinar in which we will discuss The Top Ten D&O Stories of 2022. Registration for the webinar can be found here. I hope you will please join us for the webinar.…

Continue Reading The Top Ten D&O Stories of 2022

As I noted in recent posts (for example, here), an anti-ESG backlash has been forming. The backlash has already taken a variety of forms, including anti-ESG legislation and anti-ESG litigation. Now, in what one media source called a “new front in a campaign against companies” related to ESG activities, a group of five Republican senators has sent letters to 51 large U.S. law firms warning the firms that the Senators plan to use their congressional oversight powers “to scrutinize the institutionalized antitrust violations being committed in the name of ESG.” The Senators’ letter campaign is described in a November 4, 2022 Reuters article (here). The Senators’ November 3, 2022 letters to the law firms can be found here.
Continue Reading Senators Warn Law Firms Concerning ESG-Related Advice

The hot button topic in both the investing world and the D&O insurance world these days is “ESG.” Setting aside the fundamental problem that nobody actually knows what ESG is, there is the inextricably related problem that the D&O claims risk related to ESG is fundamentally misunderstood. The current basic premise in the D&O insurance world is that companies that are “good” on ESG (whatever that means) represent better D&O insurance risks. Yet, as I have documented in numerous posts on this site (most recently here), it is not the ESG laggards that are getting hit with D&O claims; the claims are in fact being filed against companies that are proactive on ESG issues.

The latest example of this phenomenon is the securities class action lawsuit filed late last week against wood products company Enviva, which promotes itself as growth-oriented environmental, social, and governance (ESG) company. The lawsuit follows publication of a short seller report that, among other things, characterized the company as “the latest ESG farce” engaged in “textbook greenwashing.” A copy of the November 3, 2022 complaint against Enviva can be found here.
Continue Reading Wood Products Company Hit with ESG “Greenwashing” Securities Suit

As I have previously noted (most recently here), something of an anti-ESG backlash has started to take shape, at least in certain quarters. Legislatures in several states have passed legislation prohibiting state pension funds from investing in ESG- focused investments or prohibiting the state from doing business with companies that boycott certain industries. The backlash has also taken the form of litigation, as, for example, with respect to the lawsuit recently filed against Starbucks board pertaining to the company’s diversity, equity, and inclusion initiative (DEI).

As Alison Frankel discusses in an October 26, 2022 post on her On the Case blog (here), and in the latest manifestation of this kind of anti-ESG litigation, a nonprofit group has filed an action against the pharmaceutical giant Pfizer based on the company’s sponsorship of a foundation offering fellowships aimed at Black, Latino, Native American and other minority candidates. This latest lawsuit is yet another indication that the companies that get caught up in ESG litigation may the companies taking ESG initiatives, perhaps more so that ESG laggards.
Continue Reading Suits Targeting Firms Seeking to Boost Minorities Highlight ESG Risks

In prior posts on this site (for example here), I have expressed my concern that the current hot topic of ESG has a fundamental underlying flaw in that the term lacks definition and that this lack of precision has led to a great deal of sloppy thinking. A recent post on the Harvard Law School Forum on Corporate Governance provides a good examination of these ESG-related concerns. In an October 14, 2022 post (here), Douglas Chia of Soundboard Governance LLC, shows, using cybersecurity as an example, that one of the “biggest flaws” of ESG is “the subjective open-endedness of what counts as E, S, or G.”…
Continue Reading ESG’s “Biggest Risk”?

Nessim Mezrahi

Stephen Sigrist

As I have noted in prior posts on this site (here, for example) D&O insurers confront a number of underwriting challenges in the current financial environment, including a host of macroeconomic factors that are complicated affairs for their policyholders and that could even lead to claims. In the following guest post, Nessim Mezrahi and Stephen Sigrist take a look at the challenging factors the D&O insurers are facing and consider the implications. Mezrahi is co-founder and CEO and Sigrist is Vice President of Data Science at SAR LLC. A copy of this article previously was published on Law360. I would like to thank the authors for allowing me to publish their article on my site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.…
Continue Reading Guest Post: D&O Insurer Challenges Amid Market, Economic Turbulence

I hope many readers saw and read my recent post “What to Watch in the World of D&O.”  A few days ago I recorded a podcast as part of the Rising Edge Ltd’s podcast series in which I discuss several of the themes raised in the “What to Watch” post. In the podcast recording, I…