Claims coming from both sides
One group of cases alleges greenwashing: that environmental or social claims in advertising, product labels, or investor materials were false or misleading. Those claims can arise under consumer protection law, including New York's General Business Law, or under securities law when investors relied on the statements. Another group challenges the use of ESG factors themselves, including suits over retirement plan investments, state actions against asset managers, and antitrust theories aimed at climate alliances. Shareholders also bring derivative and proxy-related claims tied to board oversight of these issues. A single company can face pressure from both directions at once.
A shifting set of rules
Disclosure rules in this area have been unsettled. Federal climate disclosure requirements have been challenged and the government's position on them has changed, and state laws, including California's climate reporting statutes, have faced litigation over their scope and timing, so the current status of any rule needs to be checked rather than assumed. Regulators outside the United States, particularly in the European Union, impose their own reporting duties that can reach US companies with operations there. Meanwhile, ordinary consumer and securities laws continue to apply to whatever a company chooses to say. Review public statements, sustainability reports, marketing claims, and the data and methodology behind them, and preserve the drafts and approvals.
Managing ESG litigation risk
Our starting point is what the company has said publicly about ESG topics, how those statements were substantiated, and who reviewed them. If a claim or demand letter has already arrived, we review the specific statements, the plaintiffs, and the forum. We discuss whether disclosures should be adjusted going forward, and how to do it carefully, because changes can themselves be cited against the company. Coordination between legal, marketing, and investor relations is often the weak point. ESG litigation is easier to defend when every public claim can be tied to records that existed when it was made.
