Will ESG litigation impact tech innovation?

Since 2018 there has been exponential growth in the number of ESG related cases across the USA, Europe and Australian debt capital markets with important risk and reporting implications for asset owners and managers.

US cases

US courts were amongst the first to hear climate-change related claims in two distinct waves of litigation. Early cases focused on imposition of climate-change related monitoring and disclosures. Recent cases seek to impose damages for climate-change related loss generated by fossil fuel majors.

European cases

European claims have raised human rights, constitutional or intergovernmental agreement issues to pressure EU governments to reduce GHG emissions. Perhaps reflecting USA developments, there is also a nascent body of cases that seek to impose liability on GHG emitters’ financiers.

?Australian cases

Early Australian cases tended to focus on breach of statute or planning application appeals, whereas recent cases seem to have been inspired by the human rights and financier focus of the European case with claimants seeking to impose additional disclosure obligations on governments, borrowers and corporate lenders.

Tech-innovation impacts

Whether climate-change litigation stops at disclosure or expands to impose liability on GHG emitters and financers, climate-change litigation has already succeeded in changing the way deal makers think about climate-change risk. Importantly, ESG has evolved from an ethical risk to a litigable foreseeable financial risk.

For APAC DCM deals, these global trends mean that asset owners and managers need to monitor an ever-increasing array of direct, indirect and transitional risks. Expect also for rapidly evolving climate-science to revolutionize the traditional “security package” and drive demand for sophisticated data insights to better understand and price climate-change risk.?