Greenwashing

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In March 2021, to great fanfare, the SEC announced its formation of a Climate and ESG Task Force to “develop initiatives to proactively identify ESG-related misconduct,” as well as to “coordinate the effective use of Division resources, including through the use of sophisticated data analysis to mine and assess information across registrants, to identify potential violations.” Now, it turns out that, much more quietly, the agency has disbanded the Task Force. As first reported in a September 12, 2024, Bloomberg article (here), the SEC shut down the Task Force “within the past few months.”Continue Reading SEC Disbands Climate and ESG Task Force

In recent months, many companies have found themselves under fire from conservative advocates for their stances on ESG-related issues. At the same time, other companies have found themselves facing litigation based on allegations that they have overstated their green credentials (a set of allegations sometimes called “greenwashing”). As two recent cases show, companies can face challenges and potential liability over their sustainability claims.Continue Reading Beverage Companies Face Scrutiny Over Their Green Claims

In an unusual lawsuit that pairs individual wrongful termination allegations with class action securities law claims, a former employee and present shareholder of a unit of the UK-based publishing and data analytics firm RELX PLC alleges that the company fired him in retaliation for raising concerns about the company’s “greenwashing.” He also alleges that the company misled investors about the company’s climate commitments and its climate-related actions. The complaint alleges that the company made public commitments to climate remediation but at the same time continued to engage in business activities contrary to these commitments. As discussed below, this new lawsuit, although unusual, underscores the fact that climate related allegations, including greenwashing allegations, continue to represent a significant potential source of D&O liability. A copy of the August 6, 2024, complaint can be found here.Continue Reading Publishing and Data-Analytics Firm Hit With “Greenwashing” Securities Suit

As ESG-related litigation has developed, one definitive trend has been the emergence of litigation involving allegations of “greenwashing” – that is, claims alleging that companies overstated their ESG credentials in order to win business, attract customers, or score virtue points. To date, the greenwashing claims have emerged primarily in the U.S. and Europe. Now, Australia is getting into the act, as the Australian Securities and Investments Commission (ASIC) has brought and won its first greenwashing civil penalty action. As discussed below, the action involved claims that Vanguard’s Australian affiliate made misleading statements about its ESG-sorting processes for one of its index funds.Continue Reading Australian Regulator Wins First Greenwashing Enforcement Action

It is not news that ESG has become a battleground issue, with prominent ESG efforts now facing an anti-ESG backlash. And while in the recent past institutional investors and advocacy groups tried to push publicly traded companies to establish their ESG credentials, the ESG-related litigation (such as it has been, so far at least) has primarily been filed not against ESG laggards, but rather against companies that have tried to promote their sustainability efforts and other climate-friendly measures.

In the latest example of litigation against a company in connection with its efforts to promote its ESG qualifications, the New York Attorney General, Letitia James has filed a fraud lawsuit in New York state court against the U.S. subsidiary of JBS, a Brazil-based meat and poultry producer, alleging that its sustainability claims and its publicized goal of achieving net zero greenhouse gas emissions by 2040 misled consumers.  A copy of the New York Attorney General’s February 28, 2024, press release about the lawsuit can be found here. The NYAG’s February 28, 2024, complaint can be found here.Continue Reading NYAG Sues Meat Company for Its Net Zero Emissions Claims

While academics and others may be asking whether it is time to “say RIP to ESG,” the fact is that though some observers may be done with ESG, ESG is not done with us. A recent action by a U.K. regulator shows that companies remain susceptible to investigations and other regulatory actions for their sustainability and other product or business-related claims. In a December 12, 2023 press release (here), the U.K. Competition and Markets Authority (CMA) announced that it has started a formal investigation into the London-based consumer products company Unilever to examine the company’s “green” claims about “a number” of its products.

As discussed below, this latest regulatory action underscores the fact that companies seeking to burnish their green credentials could be subject to scrutiny and even possible regulatory action. A December 13, 2023, Wall Street Journal article about the CMA’s investigation can be found here.Continue Reading Unilever Under U.K. Investigation for Possible “Greenwashing” Product Claims

The risks and opportunities that AI presents have emerged quickly and may be evolving even faster; the whole AI phenomenon has developed much more quickly than legislators’ and regulators’ ability to respond. Among the many AI effects that regulators and other observers are struggling to assess is the extent of the AI-related litigation potential, including but not limited to the prospects for AI-related corporate and securities litigation.Continue Reading SEC Chair Warns Against “AI Washing”

Persia Navidi

Readers of this blog well know that one of the current hot topics in the world of D&O is ESG – and not just in the United States, but in Europe, and elsewhere as well. In the following guest post, Persia Navidi, Partner in Insurance, Cyber and Climate Risk at Hicksons Lawyers, provides an overview of the state of play with regard to ESG in Australia, and also discusses the related insurance issues. I would like to thank Persia for allowing me to publish her article as a guest post on this 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 Persia’s article.Continue Reading Guest Post: ESG and Financial Lines Insurance in Australia

A unit of Deutsche Bank has agreed to the entry of a cease-and-desist order and to the payment of a $19 million penalty in connection with an SEC enforcement action in which the agency alleged that the unit had made materially misleading statements about its use of ESG factors into its research and investment recommendations. The ESG-related enforcement action was accompanied by a separate anti-money laundering (AML) enforcement action against the unit, Deutsche Bank’s New York-based investment advisor subsidiary, DWS Investment Management Americas (DWS), in which DWS agreed to pay a separate $6 million penalty. The ESG-related action, which apparently involved the SEC’s Climate and ESG Task Force, highlights the ways in which companies seeking to be proactive on ESG-related issues can attract claims. The action also underscores the fact that the SEC is scrutinizing ESG-related disclosures.Continue Reading Deutsche Bank Unit Hit with SEC Penalties Over ESG Claims

Readers of this blog know that one of the more significant recent developments in the ESG arena has been the rise of the ESG backlash – that is, moves by state legislators and others to try to push back against a supposed ESG agenda. These developments have put company executives squarely in the crossfire, as they struggle, on the one hand, to address continued efforts by activist stakeholders to push companies toward expanded ESG commitments, and conflicting efforts by conservative politicians to punish companies for supposedly pursuing a “woke” agenda. How are companies to respond to these competing forces? Evidence suggests that increasingly companies are responding by “greenhushing” – that is, by keeping quiet about their ESG initiatives.Continue Reading Next Up on the ESG Front: Greenhushing?