A new report has found the number of climate-washing related lawsuits filed against corporations has increased almost four-fold.
The report, “Global trends in climate change litigation: 2023 snapshot,” was published by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science.
The report, which is the fifth of its kind, found that 266 cases related to climate were filed in 2021 and 222 new cases in 2022. Although there is a dip year on year, of the 2,341 historic climate-related litigation cases analysed in the report, around two-thirds of these cases (1,557) have been brought since 2015 — the year of the Paris Agreement.
Of these, 1,590 were filed in the US, 130 in Australia, 102 in the UK, and almost 70 cases were filed with the Court of Justice of the EU.
The most common type of climate-related lawsuit found in the report is one challenging the truthfulness of a company’s climate commitments, also known as ‘climate-washing’, which saw an almost fourfold increase in cases between 2019 (6) and 2022 (26).
However, litigation is becoming more diverse, with cases now being filed in a wider range of countries and covering a wider range of issues. For example, the report found that there has been an increase in lawsuits challenging the role of financial institutions in financing fossil fuels.
“One of the most significant groups of climate-washing cases to emerge in recent years have been cases challenging the truthfulness of corporate climate commitments, particularly where these are not backed up by adequate plans and policies,” said the study authors, Joana Setzer and Kate Higham.
“The growth in climate-washing cases reflects broader concerns with corporate accountability for climate pledges, along with ongoing debates about the role of companies in climate decision-making.”
Recent examples of such investigations include those into Goldman Sachs, Deutsche Bank, and US fund giant, Vanguard Group.
The report comes at a time of growing concern about the risks of greenwashing. Greenwashing is defined as the practice of making misleading or deceptive claims about the environmental benefits of a product or service.
A recent Google poll found that a majority of C-suite executives and VPs admitted to overstating or inaccurately representing their sustainability activities. Many of these executives said that they set sustainability goals or pledges without a concrete plan to reach them.
Additionally, The European Banking Authority (EBA) has warned that there is an increase in potential cases of greenwashing across all financial sectors, with analysis showing a low success rate for the use of eco labels on investment products.
Tackling greenwashing
Investors and governments are increasingly looking for information about the sustainability efforts of companies. However, the proliferation of ESG ratings providers and methodologies has led to growing uncertainty about the accuracy of these ratings.
To address this, both the UK and the EU are looking to implement rules around ESG ratings providers. The UK will do so with a voluntary code, which it will look to make mandatory in the future.
The EU, on the other hand, is currently drafting legislation that would require ratings providers to acquire authorisation and supervision from the European Securities and Markets Authority (ESMA).
The proposed legislation from the EU would also include provisions for consumer protection. For example, it would require companies to provide clear and transparent information about the sustainability of their products. This would help consumers make informed choices about the products they buy.
You can find the full report here.
