Has there been an increase in ESG-related disputes?

Types of ESG disputes

ESG disputes typically fall into the following categories.

1. Greenwashing and Misleading ESG Claims
   Companies overstating their sustainability credentials face legal and reputational risks. For example:
   In 2022, Swedish fashion giant H&M faced a class action lawsuit in New York over its sustainability-made marketing. Plaintiffs claimed that H&M’s advertising misled consumers - for instance, a dress marketed as using 20% less water actually required 20% more water. Although the case was voluntarily dismissed after H&M removed its Conscious Choice label, it highlighted the reputational risks of overstated ESG claims.
2. Climate strategy and emissions accountability
   Climate-related litigation is increasingly targeting corporate boards and strategies:
   ClientEarth v. Shell (2021): The NGO ClientEarth successfully challenged Shell’s climate transition plan, arguing it fell short of its stated emissions targets. Shell had claimed a 45% emissions reduction target by 2030, but ClientEarth argued the actual figure was closer to 4%. A Dutch court ordered Shell to revise its plan, setting a precedent for shareholder activism and legal accountability in climate strategy.
3. Supply chain and human rights violations
   Disputes are expanding to include certifying bodies and indirect actors:
   The London Bullion Market Association (LBMA) faces a potential claim over deaths at a Tanzanian gold mine in 2019. Though not directly involved, LBMA had certified a refiner linked to the mine. Claimants argue that LBMA breached its duty of care by granting certification despite alleged abuses. This therefore expands the scope of liability to trade bodies offering ESG-type accreditations. The case could set a precedent for applying tort principles like foreseeability and remoteness to ESG-related certifications, prompting accrediting organisations to reassess their responsibilities.
4. Mergers and acquisitions (M&A) and investment disputes
   ESG factors are increasingly central to post-transaction disputes:
   A recent survey found 51% of M&A disputes involved ESG-related claims, including surprise costs from green energy projects and allegations of greenwashing.

The role of Forensic professionals

As ESG litigation grows, forensic accountants are increasingly vital in:

• Due diligence during M&A to assess ESG risks.
• Audit negligence cases, evaluating whether ESG disclosures were adequately reviewed.
• IPO risk assessment, for example:
  Deliveroo’s IPO in March 2021 underperformed due to investor concerns about its reliance on gig workers and the shaky ethics that comes along with this. Deliveroo's IPO was widely considered a disappointment, with shares dropping by 26% on the first day of trading, wiping £2 billion off its value. This illustrates how ESG perceptions can have a huge influence on market outcomes.

ESG litigation as a strategic imperative

The rise of ESG-related disputes signals a broader transformation in corporate accountability. Companies must not only comply with regulations but also ensure that their ESG claims are substantiated, their certifications are robust, and their value chains are ethically sound.

With litigation expanding across jurisdictions and sectors, proactive ESG risk management is essential. The data is clear: ESG disputes are rising, evolving, and have the capacity to reshape the legal landscape.

How we can help

Our Forensic Services team have extensive experience with post-transaction disputes and professional negligence cases. We are always happy to have an initial no obligation discussion on any matters where we can add value and advice. For further information, please contact Martin Chapman, or your usual Crowe contact.