Threat of potential litigation leads organizations to reassess their ESG frameworks

Canadian Lawyer spoke with Stephanie Stimpson on ESG-related litigation trends, some of which stem from the Supreme Court of Canada’s ruling that deemed the federal government’s carbon pricing regime—under the Greenhouse Gas Pollution Pricing Act—to be constitutional (you can read our full analysis of the Supreme Court’s ruling here.)

Stephanie, co-author of our the article “From aspiration to accountability: ESG for boards ” which was referenced in the article, pointed out that this heightened focus on addressing climate change has opened the door for governments and organizations to ESG-related litigation as “everybody starts to really then focus on [ESG] from that risk perspective”.

Stephanie noted that while boards are used to dealing with the variety of matters that fall under the ESG umbrella, such as corruption and workplace safety, they are now faced with a wider set governance and social criteria which stem from legislation and investor and reputational pressures.

“The ESG lens is applying to all of this,” Stephanie said.

Stephanie added that boards of directors need to look at ESG from both a risk and opportunity perspective, noting that good ESG management offers “an opportunity to show good corporate behaviour” and from a litigation perspective, “it serves as a risk-management tool.”

Stephanie continued to note that issues such as greenwashing have led to public outcry and demands that organizations are held accountable for their actions.

“It is now coming down to accountability,” Stephanie said.

“Companies are getting called out for social-washing and greenwashing, where they're making commitments [but] they're not actually putting action plans in place to execute on those commitments.”

You can learn more about our ESG work on the practice page.