Companies and directors face significantly increased liability risks in relation to sustainability related disclosures, including claims by shareholders or NGOs.
Direct legal obligations and market expectations of transparency are placing corporates and financial market participants under increased pressure to publish detailed information on sustainability issues. The developing legal and regulatory framework combined with heightened market expectations, create fertile ground for a growth in litigation risk.
- Corporates face the highest areas of risk from statements in or omissions from published documents and disclosures used in ESG related claims.
- Other financial market participants face the highest risk from misrepresentation and mis-selling, actions of investee companies, disclosures used in claims against investee companies, regulatory action by the FCA and fiduciary duties.
- Many organisations have a corporate as well as a financial market participant footprint and face these risks in both respects.
The varying level of liability risk means that companies and other financial participants need to carefully consider managing the risk.
