Environmental, Social and Governance Investigations

47.1 Introduction

Investigations relating to environmental, social or governance issues are not new. However, over the last decade the interest in ‘ESG’– a term thought to have been coined by a 2005 UN Global Compact study² – has grown and ESG factors have become important criteria for investors to identify material risks and, increasingly, growth opportunities. With more attention on the risk and rewards, ESG-related investigations are on the rise. These are now often led by lawyers because of the growing legal and regulatory implications, and the sensitivities frequently involved. We look at some common features and challenges of investigating these issues, and how these can be approached in effective ESG-related investigations.

47.2 ESG issues and investigation triggers

Over a number of years ESG has fast risen to the top of board agenda, with companies more aware that failure to address these matters can be detrimental to their businesses legally, financially, operationally and reputationally. Global events such as #MeToo, Black Lives Matter and increased climate change activism have turned the spotlight onto ESG practices such as whistleblowing arrangements, diversity and inclusion, and environmental crisis management. ESG issues have gained traction in global policy discussions, an example being the UN Climate Change Conference (COP26) that took place in November 2021, with a focus on ESG reporting as a driver of positive change. Investors and investment managers, among other stakeholders, look to ESG criteria to assess whether businesses are attractive propositions and the level of ESG risk they carry, and there is growing external pressure from governments, regulators and international organisations to do so. Business leaders are increasingly accepting the need to proactively identify their own ESG standards, against which stakeholders will hold them to account. Building compliance frameworks to meet those expectations and considering response plans are just some of the ways that companies can mitigate ESG risk.

But what are ESG issues and when do investigations into them arise? What falls within ESG is evolving, and the intersectionality between the three pillars makes division into individual concepts artificial, but broadly:

• Environmental: Fuelled by media coverage, there is increasing pressure on companies to take responsibility for their role in environmental impacts. The environmental criteria by which a company might be judged include its use of energy, how it uses raw materials and deals with its waste, and how it interacts with the natural world. There is progressively more law and regulation being made in this area, including mandatory reporting obligations. Businesses are responding to these obligations and to activist investors by setting climate change targets against which they can be held to account. An ESG-related environmental investigation can differ from a ‘traditional’ environmental investigation³ as the focus is not only on scientific and technical assessments of root cause and impact, but also on the company’s potential culpability, its actions and what can be inferred about its governance.
• Social: Social criteria typically look at the impact businesses have on society and how companies remedy harms they cause or contribute to, with an emphasis on transparency of communication. To meet stakeholder expectations, companies are seeking to demonstrate that they have a positive impact on the people and communities with whom they have a relationship. Conversely, it is increasingly clear that companies can face serious reputational damage, financial loss, operational disruption and legal liability if they are involved in human rights abuses, for example, through their supply chain. As a result, a number of businesses are attempting to reduce harm and negative impacts on people and their rights. Moreover, companies’ positive and negative impacts are increasingly being assessed, including through mandatory reporting to regulators and voluntary reporting to ESG rating organisations, on workplace behaviours and culture, diversity and inclusion of the workforce, and the accountability of executives.
• Governance: Governance factors determine, for example, how a business is controlled and overseen by its board and senior management, assesses and manages its risks, makes decisions, obtains and acts on staff feedback, remediates shortcomings and is structured. When considering ESG issues, environmental and social factors such as climate change or human rights risks stand out more prominently. However, corporate governance is often significant in determining how successfully a company fulfils its environmental and social responsibilities. It may have a bearing on whether incidents occur and, if they do, on how effectively they are investigated and remediated. ‘Good’ governance factors can range from accurate and transparent company reporting, to employee engagement (including grievance and collective consultation mechanisms, and whistleblowing arrangements). Allegations of poor corporate governance have underpinned a number of high-profile ESG failings.⁴ Poor governance can also result in or amplify the effect of bribery and corruption failings or failings in a business’s supply chain, among other things.

Against this backdrop, there are a multitude of potential triggers for investigation – both internal and external. Salient examples include the following:

• Environmental disasters: Events such as an oil spill or the collapse of a dam can trigger investigations into the adequacy of the risk management processes put in place by businesses to prevent them.
• Supply chain issues: The complexity and global nature of supply chains render them vulnerable to bribery and corruption and human rights abuses that often entail labour abuses, but can also include negative impacts on other human rights, including the rights related to health, food, land or water.⁵
• Displacement of communities: Many large-scale infrastructure projects lead to the displacement of communities. The social impact can be severe and can trigger huge pressure from non-governmental organisations (NGOs) and others to conduct investigations.
• Discrimination, harassment and culture: Alleged incidents of workplace misconduct continue to trigger investigations. Poor culture in all or part of the business, including where employees feel unable to speak up, can manifest itself in many ways, such as in discriminatory behaviour⁶ or sexual harassment allegations.⁷ For regulated entities in the financial sector, non-financial misconduct (and more broadly, a non-inclusive culture or environment) is increasingly seen as a falling within the regulatory perimeter.
• Greenwashing: Investigations are beginning to arise from allegations of greenwashing, namely the misselling or misstatement of the sustainability credentials of a company or its financial products or performance (and, similarly, an emerging trend in relation to concerns over ‘social washing’). This has been the subject of growing scrutiny by regulators. The UK Financial Conduct Authority (FCA) recently published a set of guiding principles to address greenwashing in ESG and sustainable investment funds.⁸ The US Securities and Exchange Commission (SEC) recently formed a task force to proactively identify misstatements in ESG disclosures by public companies and investment managers.⁹ SEC Chairman Gary Gensler has voiced specific concern about investment funds that market themselves as green or sustainable without using consistent data and criteria to substantiate these claims.¹⁰ Unsubstantiated claims regarding the nature of ESG-focused funds also interest regulators because many charge substantially more in fees and other costs than non-ESG funds.

47.3 The legal and regulatory frameworks

As with any investigation, a key step is ascertaining the standards against which the subject matter will be assessed. These can be particularly complex in the ESG sphere. While there will be clear legal obligations engaged in some investigations, in others, companies may need to look at both ‘soft’ and ‘hard’ law commitments. Although not legally binding, soft law is typically prominent in the design and execution of ESG-related investigations, as companies seek to demonstrate not only strict compliance with law or regulation, but also transparency and a more comprehensive understanding of ESG issues. Any internal standards (including corporate policies and procedures), along with the company’s external statements and disclosures, may also be relevant benchmarks against which investigations can be conducted (and reputational management may need to be employed).

In some areas, such as human rights, there is a relatively advanced framework against which to assess conduct – and against which knowledgeable stakeholders will expect a company to assess conduct. In other areas, the applicable standards will be less clear: the company will need to come to a view on what frameworks it will apply, while considering the likely expectations of stakeholders as to the appropriate standards (particularly where corporate standards have been publicly expressed). This lack of clarity, and the potential for a mismatch in expectations of relevant standards, makes ESG-related investigations particularly challenging.

47.3.1 Hard law

A vast amount of domestic legislation and regulation has underpinned each of the ESG pillars for several decades. For example, the broad frameworks underpinning environmental protection in the United Kingdom are well established.¹¹

Further legislation and regulation focused on corporate involvement in ESG issues has been developing on both sides of the Atlantic. In the United Kingdom, this includes a duty on directors to promote the success of the company, including by having regard to a series of factors promoting ESG objectives.¹² In the United States, regulations are used at the federal level, but also at the state level, such as the Californian legislation requiring companies to disclose the extent of their due diligence with respect to human trafficking and slavery in their supply chains.¹³

As regulators respond to investor and consumer concerns, a number of additional legally binding obligations have been or are expected to be implemented, including individual accountability regimes, such as the Senior Managers and Certification Regime for certain regulated entities in the United Kingdom, under which the regulator expects ‘firms to have clear roles and responsibilities for the board and its relevant sub-committees in managing the risk from climate change’.¹⁴ Particularly notable are the increasing reporting, disclosure and due diligence requirements, for example:

• the EU Taxonomy Regulation¹⁵ and Sustainable Finance Disclosure Regulation¹⁶ require disclosure by qualifying entities on the environmental sustainability of their activities. Following Brexit, the United Kingdom intends to implement its own ‘green taxonomy’ and Sustainability Disclosure Requirements, mainly targeted at financial services firms and their investment products, requiring them to report on their impact on the climate and environment;¹⁷
• amendments to the SEC’s Regulation S-K in August 2020 required all US public companies to include a disclosure topic in quarterly and annual reports describing each company’s human capital resources to the extent that such disclosures are material to understanding the registrant’s business; and
• the SEC recently requested comment on mandating additional ESG disclosures for public companies in their quarterly and annual reports; most responders strongly supported mandatory disclosure requirements and the SEC is working on proposed disclosure rules.

These requirements may be relevant both to assessment of the issues being investigated (i.e., failure to properly disclose on ESG matters) and to the conduct of the investigation itself (it may be appropriate or necessary to report on the decision, progress or outcome of any ESG-related investigation under the applicable rules). While climate change-related reporting requirements are generally the most advanced, companies should also be aware of other potentially relevant reporting requirements, such as money laundering reporting obligations or those relating to modern slavery.

47.3.2 Soft law

Soft law standards and principles provide a framework for companies seeking to advance their ESG credentials. There are two broad categories that are most likely to be relevant when conducting an ESG-related investigation: consensus-based international standards and principles, and voluntary standards and principles.

47.3.2.1 International standards and principles

The most notable of the consensus-based international standards and principles are the UN Guiding Principles on Business and Human Rights (UNGPs). The UNGPs detail processes known collectively as human rights due diligence, which involves a company taking steps to identify, prevent, mitigate and account for how it addresses its potential or actual adverse human rights impacts, as well as processes to enable remediation of such impacts that occur where the company has caused or contributed to them. These processes have been applied beyond human rights, being incorporated in the OECD Guidelines for Multinational Enterprises (OECD Guidelines), for example, which prescribe a due diligence approach applicable in all areas where businesses can be expected to act responsibly (for example, the environment). Those carrying out ESG-related investigations increasingly consider whether the key precepts of the UNGPs and OECD Guidelines have been met in the conduct being investigated.

Further, the International Financial Reporting Standards Foundation’s global ESG reporting standard, to be published in 2022, will be set by the new International Sustainability Standards Board, with its scope, format and content to be determined.¹⁸ Ultimately the standards will need to be adopted in domestic law by jurisdictions or be a voluntary standard that companies adhere to alongside any mandatory regulatory reporting.

47.3.2.2 Voluntary standards and principles

Prominent voluntary ESG regimes at an international level include the Sustainability Accounting Standards Board and the Global Reporting Initiative. The latter is an independent organisation based in the Netherlands aiming to provide a common language for organisations seeking to communicate their ESG impacts. It creates accountability by allowing investors to see whether companies are enacting environmental conduct standards. Companies volunteer to be held accountable to evidence their good ESG practices.

Specific jurisdictional standards and principles, such as the UK Corporate Governance Code, may also apply. The FCA requires all companies with a UK premium equity shares listing to annually report on their application of the Code – on a ‘comply or explain’ basis, which includes setting out where they have not applied it – effectively making it part of company law for those entities. Private companies are encouraged to apply the Code, but do not have the same reporting requirement.

ESG-related voluntary standards and principles can also be industry or sector-specific. For example, there are several financial sector voluntary initiatives, such as the Equator Principles, UN Environment Programme Finance Initiative/UN Global Compact Principles for Responsible Banking and UN Principles for Responsible Investing for investment managers and other investors. Similarly, the extractives industry is encouraged to look to standards including The Extractive Industries Transparency Initiative, The Responsible Gold Mining Principles and The International Council on Mining & Metals 10 Sustainable Development Principles. In some situations, companies will need to apply standards and principles as part of a commercial relationship; for example, clients of the International Finance Corporation (IFC) are required to uphold the IFC Performance Standards.

Companies subject to an ESG-related investigation should ensure any voluntary standards and principles that they claim to follow are adhered to in the investigation or the assessment, to protect the integrity of their ESG commitments.

47.3.3 Corporate standards

In addition to hard and soft law obligations, corporate standards – policies, procedures, codes of conduct and values – are essential benchmarks for an ESG-related investigation. This is particularly the case where a company makes public its ESG commitments, indicating to stakeholders that these are the standards against which it will hold itself, its employees and its business partners accountable. An ESG-related investigation will frequently find that corporate standards, and systems and controls to meet them, are part of the problem. In all ESG-related investigations, but particularly those where governance is found lacking, there is likely to be the need to feed back into the business the conclusions of the investigation and actions for putting in place more robust corporate standards – and ensuring compliance with and effective monitoring of those standards – to address investigation findings.

47.4 Particularities of ESG-related investigations

The traditional investigation considerations as to the scope, claims to privilege, resourcing, available expertise, governance, engagement with relevant regulators and law enforcement, engagement with stakeholders, etc., also apply in ESG-related investigations. However, a number of other issues arise owing to the often particular nature of ESG issues; we set out below some observations, and the common features and challenges.

47.4.1 Triggers

Many of the triggers for ESG investigations, such as customer complaints, employees escalating concerns, employee surveys, whistleblowing reports, reviews by internal compliance or audit functions, or questions from regulators are common in any investigation. However, in ESG-related investigations, the range of stakeholders almost always extends further, and the ways issues can come to the fore are generally more varied. Numerous NGOs, consumer and employee groups, and the media have been actively exposing companies on ESG matters for some years, and investors, regulators, governments and policymakers now frequently join those stakeholders in applying pressure on companies facing ESG issues. Triggers may include enquiries by NGOs, internal leaks to NGOs or the press, and political pressure. These triggers are less easy to predict and monitor, and companies may find themselves more at risk of being blindsided by the discovery of an ESG issue and under more pressure to provide a response.

In such circumstances, companies should ensure that they counter this with an effective communications strategy at an early stage. This may be part of a wider crisis management strategy in the context of significant matters – but in almost all ESG-related circumstances will be relevant. Scoping is always important in the management of any investigation, but the scrutiny will likely be greater when considering whether it is appropriate for the company to investigate a particular ESG incident, or to undertake a wider investigation (for example, where a harassment incident indicates a more systemic cultural problem). An ill-advised press release that overpromises on the investigation may cause the company to lose control of the scope and set it up to disappoint stakeholders from the outset.

47.4.2 Investigator expertise and independence

The many and varied stakeholders involved in ESG-related investigations may take a keen interest in not only the outcome and findings of the investigation but also its approach and conduct.

ESG expertise is growing within companies, but for those lacking the resources of large institutions, it may be necessary to bring in specialists in the ESG issues at play alongside others experienced in conducting investigations. Inadequate expertise or insufficient resources will undermine the investigation’s credibility.

Independence can be particularly important in the context of ESG investigations, which often deal with sensitive issues, and any real or perceived conflict of interest may cast doubt on the investigation’s integrity. Different degrees of independence may be implemented, from conducting the investigation internally with external legal advice, to instructing external counsel or another third party to lead the investigation. Whatever the approach, companies should be cautious in responding in the immediate aftermath of an ESG incident with a press release announcing a fully independent investigation. A stakeholder’s interpretation of ‘independent’ in this context might translate as an expectation that the investigation will be wholly conducted by a third party with no existing relationship, or likely future relationship, with the company or its investors. Where this is not case (for example, when the investigation is a collaboration between the company and its external counsel),¹⁹ it is important to be clear about the approach to ‘independence’ to avoid misleading engaged stakeholders.

47.4.3 Transparency, privilege and reporting

Companies may face pressure to be transparent about processes and their effectiveness, to ensure accountability. There could be tensions between these considerations and legal risks for the business. Companies will often make – and be expected by stakeholders to make – transparency commitments, which might include, in the context of an ESG-related investigation, the publication of some forms of investigation findings, such as a written report. Transparency commitments may also be enshrined in law, with some jurisdictions requiring some level of reporting on non-financial issues.

This may have implications for the company’s ability to claim legal privilege over documents produced as part of the investigation. A company intending to have the benefit of legal privilege (or, in some jurisdictions, professional secrecy) will need to set up the investigation team according to the requirements of the relevant jurisdictions. However, while for internal investigations there are usually alternatives to publishing formal reports in order not to waive privilege (such as providing oral updates on factual findings), this may not be sufficient to adequately respond to the various stakeholders in an ESG investigation, who may expect a written report. Companies often make reports on ESG issues publicly available as a result.²⁰ Companies will want to consider this at the outset of any investigation and not assume that materials produced along the way will necessarily be withheld from publication at a later stage.

47.4.4 Stakeholder engagement

Traditional investigations tend to be inward-looking and largely focus on the conduct and the consequential risks to the company. They often involve determining whether breaches or failings have occurred and identifying responsible parties. ESG-related investigations focus not only on business risk, but also on risk to external parties affected by the conduct under investigation. Where there are external ‘rights-holders’,²¹ this will likely mean more engagement with potential victims, local communities, NGOs and others whose rights may be affected by, or who speak for those affected by, the relevant issues.

ESG investigations can touch on matters that mean that stakeholder engagement can be very challenging. Investigations looking at possible infringements of human rights or environmental disasters will involve dealing with potential victims and often whole communities deeply and personally affected. Political tensions might also arise; for example, state-sponsored human rights abuses (e.g., in relation to forced labour) mean that a company with operations in certain jurisdictions can be at risk if it does not navigate an investigation carefully. Given these sensitivities, stakeholder engagement is a touchstone for each step of an ESG investigation. Engagement should be built into the investigation plan, and extensive interaction with external stakeholders such as rights holders and NGOs may be required.

Companies also need to understand that the existence of readily identifiable victims, rights holders and whistleblowers can change the dynamics of the investigation, and this frequently occurs in ESG investigations. Their rights will need to be carefully handled during the investigation, including in interviews. This may involve a balancing of requests for anonymity and data protection issues against the need to put allegations to implicated parties and report to stakeholders.

47.4.5 Heightened business risk

Most traditional investigations will carry reputational, financial, operational and legal risk for the company. ESG-related investigations are no different, but typically those risks can be easily heightened.

• Reputational risk: An ESG investigation that is not properly handled can result in a reputation built up over many years disappearing overnight. Investors and wider society increasingly expect ESG factors to be taken into account by companies to guide governance, decision-making and strategy as part of responsible business conduct. Recent years have seen a rise in activist shareholders proposing or supporting resolutions requiring companies to adopt gold standards on ESG issues, or pushing for changes in corporate governance, as well as publishing score cards comparing companies’ ESG performance. These actions are often supported by consumers and NGOs, who may also call for boycotts, generate negative publicity through campaigning on ESG issues, or put pressure on regulators to intervene and investigate allegations of ESG failures.
• Financial risk: As investors increasingly focus on, and publicly commit to, evaluating their holdings based on ESG criteria, failure to properly investigate and remediate ESG issues can lead to investors considering or opting to withdraw funding, resulting in loss of market capitalisation and access to capital. This is illustrated, for example, by Unilever’s public statement that its approach of integrating human rights and other sustainability considerations into mergers and acquisitions made it an attractive buyer that might be differentiated among bids.²²
• Operational risk: Clearly, ESG incidents can lead to business interruption for the company or to its supply chains. Where a misconducted investigation further damages a company’s relationships with stakeholders, such as local communities, this may, for example, have implications for local recruitment, or amplify the risk that groups take actions to interrupt company business.
• Legal risk: While follow-on litigation and regulatory enforcement is a very real risk following many investigations, ESG issues attract a lot of attention. Increasing political and societal interest means additional prominence of ESG incidents in the media; there has been a rise in shareholder activism and NGO use of litigation to seek corporate accountability;²³ claimant firms and funders are active in the space; and regulators will likely feel they need to be seen to be taking action. To take climate change as an example, in recent years shareholders have pursued claims for failure to adequately report climate change risks, as well as for breach of directors’ fiduciary duties to take the risks seriously in their decision-making. NGOs bring strategic claims for ESG failures, as well as supporting alleged victims in bringing claims. Businesses have faced increasing litigation in respect of non-financial misconduct, in particular sexual harassment allegations in the wake of #MeToo and Black Lives Matter. Increased claims by employee whistleblowers alleging that they have been subjected to a detriment or dismissal as a result of an ESG-type disclosure (for example, that a company is greenwashing products) are anticipated. Key to mitigating legal risk is to consider it from the outset of the investigation, including awareness that the content of the investigation might feed, and be disclosed in, claims or enforcement actions in the future. Clear boundaries on the information produced and to whom it is circulated during the investigation will assist in containing material produced, as will communications protocols giving those privy to relevant information guidance on what communications are and are not appropriate.

While control over the external environment to mitigate the risk is more difficult, companies can take proactive steps in advance of an incident occurring to encourage employees to raise issues internally before they escalate into business risk or are leaked to shareholders, the media or NGOs: promoting a strong internal ‘speak up’ culture; having efficient grievance and whistleblowing processes; engaging with staff at all levels; monitoring the effectiveness and outcomes of grievance processes; and appointing a non-executive or supervisory director with responsibility for engagement on these issues. Once the investigation is in progress, regular engagement with stakeholders will be important to try to minimise any dissatisfaction with the outcome and the likelihood of stakeholders seeking redress through the courts.

47.4.6 Remediation

It is important from a governance and stakeholder engagement perspective to track recommendations and actions arising as the investigation progresses. But consideration of remediation is not something that can be left to the end of an ESG-related investigation. While remediation follows many investigations, the sensitivity and high-profile nature of ESG issues mean that there will likely be a very strong expectation that an ESG-related investigation considers remediation as part of its recommendations, and so the thinking on remediation will need to be progressed alongside the investigation. This is particularly the case with societal issues, where frameworks such as the UNGPs require businesses to offer or participate in remediation where they have caused or contributed to adverse human rights impacts. Under such frameworks, whether or not businesses have caused or contributed to negative impacts, they are expected to design and implement grievance mechanisms and reporting channels to facilitate prompt and effective identification and resolution of potential future issues, as well as mechanisms to evaluate their own performance in this regard. In some cases, remediation may include disciplinary sanctions, which must be handled sensitively and appropriately to balance appropriate investigatory action with employment law requirements to mitigate future risk.

Some ESG issues may not be quickly remedied, and statements around remediation need to be realistic; failure to act on remediation commitments could result in further scrutiny or criticism. Similarly, remediation may require actions by third parties (for example, within the supply chain), where practicalities and contractual arrangements may hinder swift remediation.

Footnotes

¹ Emily Goddard is an associate and Anna Kirkpatrick and Ellen Lake are senior associates at Clifford Chance. The authors would like to thank their colleagues Amy Bird, Michael Coxall and Michelle Williams for their assistance in preparing this chapter.

² The Global Compact, ‘Who Cares Wins: Connecting Financial Markets to a Changing World’ (2004). In 2006, the concept of ESG was integrated into the UN-backed Principles for Responsible Investment, which provide a framework for the incorporation of ESG factors into investment practice.

³ See, for example, BP’s investigation into the Deepwater Horizon matter in 2010. The technical report by BP’s internal incident team was made publicly available: ‘Deepwater Horizon, Accident Investigation Report’ (8 September 2010), ">https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/sustainability/issue-briefings/deepwater-horizon-accident-investigation-report.pdf.

⁴ See, for example, the multiple investigations into Volkswagen’s emissions testing, ‘Volkswagen to sue former management over Dieselgate’ (26 March 2021), https://globalinvestigationsreview.com/fraud/german-car-manufacturer-volkswagen-will-take-legal-action-against-its-former-ceo-and-the-head-of-its-audi-unit-over-alleged-negligence-linked-the-long-running-and-costly-diesel-emissions-scandal.

⁵ See, for example, recent allegations of forced labour use at supplier factories, ‘BooHoo to launch investigations into its supply chains: Independent Review into the boohoo Group PLC’s Leicester supply chain’ (24 September 2020) https://www.boohooplc.com/sites/boohoo-corp/files/final-report-open-version-24.9.2020.pdf.

⁶ See, for example, the investigation by the United Kingdom’s Conservative Party following high-profile allegations of Islamophobia, ‘Report of the independent investigation into alleged discrimination, citing protected characteristics, within the conservative and unionist party in England, Wales and Northern Ireland’ https://singhinvestigation.co.uk/.

⁷ See, for example, the high-profile investigation into alleged misconduct of the CEO of UK fashion retailer Ted Baker, https://markets.ft.com/data/announce/detail?dockey=1323-14036908-6QQK7UD9OP59VBEI1KK552QP46

⁸ FCA Dear Chair letter, ‘Authorised ESG & Sustainable Investment Funds: improving quality and clarity’ (19 July 2021), https://www.fca.org.uk/publication/correspondence/dear-chair-letter-authorised-esg-sustainable-investment-funds.pdf.

⁹ SEC press release, ‘SEC Announces Enforcement Task Force Focused on Climate and ESG Issues’ (4 March 2021), https://www.sec.gov/news/press-release/2021-42.

¹⁰ Public Statement by SEC Chairman Gary Gensler in Prepared Remarks Before the SEC’s Asset Management Advisory Committee (7 July 2021), https://www.sec.gov/news/public-statement/gensler-amac-2021-07-07.

¹¹ In the United Kingdom, environmental legislation is constantly being amended, updated and consolidated, but current examples include the Environmental Protection Act 1990 and Environmental Permitting (England and Wales) Regulations 2016.

¹² Companies Act 2006, s.172.

¹³ The California Transparency in Supply Chains Act.

¹⁴ Prudential Regulation Authority, Supervisory Statement SS3/19, ‘Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change’ (April 2019), https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/supervisory-statement/2019/ss319.

¹⁵ Regulation (EU) 2020/852 (Taxonomy) on the establishment of a framework to facilitate sustainable investment.

¹⁶ Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector.

¹⁷ HM Treasury, ‘Chancellor sets out how UK financial services can create prosperity at home and project values abroad in first Mansion House speech’ (1 July 2021), https://www.gov.uk/government/news/chancellor-sets-out-how-uk-financial-services-can-create-prosperity-at-home-and-project-values-abroad-in-first-mansion-house-speech.

¹⁸ See the International Financial Reporting Standards’s Sustainability-related Reporting website for current status, at https://www.ifrs.org/projects/work-plan/sustainability-reporting/#current-stage.

¹⁹ This is usually an effective approach, through the combination of external counsel’s expertise, and internal personnel’s familiarity with the company’s business and internal standards.

²⁰ See, for example, the BooHoo investigation, supra note 5.

²¹ Under the Universal Declaration of Human Rights, all human beings are ‘rights-holders’; individuals are rights holders that can make claims, and states and other actors are ‘duty bearers’ that are responsible and can be held accountable for their acts or omissions.

²² Unilever Human Rights Progress Report 2017, p. 12, https://www.unilever.com/Images/human-rights-progress-report_tcm244-513973_en.pdf. ‘Our approach to both environmental and social sustainability makes us an attractive buyer to many companies/shareholders who share our values and can be an important differentiator in a field of bidders.’

²³ See, for example, Vedanta Resources PLC and another v. Lungowe and Others [2019] UKSC 20 (regarding alleged toxic emissions from the Nchanga Copper Mine in Zambia. The claimants are a group of 1,826 Zambian citizens alleging that both their health and their farming activities have been damaged by repeated discharges of toxic matter from the copper mine into their water sources from 2005 to date); Mariana & Others v. BHP Group PLC and another [2021] EWCA Civ 1156 (the Court of Appeal granted the applicants permission to appeal against the High Court decision in relation to a claim arising from the collapse of a Brazilian dam in 2015. The claimant group is made up of at least 200,000 people); Milieudefensie et al v. Shell [Hague District Court, Judgment of 29 January 2021 C/09/365498 / HA ZA 10-1677 (zaak a) + C/09/330891 / HA ZA 09-0579] (the Court found in favour of four Nigerian farmers and a number of environmental activists following six pipeline leaks in Nigeria. Shell’s Nigerian subsidiary and the parent company, Royal Dutch Shell, were found to have violated their duty of care); and Okpabi and others v. Royal Dutch Shell Plc and another [2021] UKSC 3 (the UK Supreme Court concluded that it was at least arguable that the parent company owed a duty of care to the claimant Nigerian citizens in respect of alleged environmental damage and human rights abuses arising from oil leaks from pipelines and associated infrastructure operated by Shell’s Nigerian subsidiary).