(L-R)Bonnie Barnett and Jared Black of Faegre Drinker Biddle & Reath. Courtesy photos Evolving Litigation Risks in Green Investing, Green Marketing and ESG
As environmental, social and governance (ESG) considerations become more integrated into corporate culture and investing, litigation risks grow, from potential "greenwashing" claims to attempts by certain states to prevent employee retirement funds from using ESG considerations as a metric for investing.
July 21, 2023 at 02:26 PM
8 minute read
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As environmental, social and governance (ESG) considerations become more integrated into corporate culture and investing, litigation risks grow, from potential "greenwashing" claims to attempts by certain states to prevent employee retirement funds from using ESG considerations as a metric for investing. This article will discuss current litigation trends in the ESG arena, practical suggestions for minimizing litigation risk and developments to watch.
Green Investing: Litigation Risks in Use of ESG Factors by Retirement Funds
Although the Employee Retirement Income Security Act of 1974 (ERISA) and ESG are not frequently used in the same sentence, green investing in retirement funds has become a litigation hot button. In December 2022, the Department of Labor (DOL) published an amendment (the Biden Rule) to the Investment Duties Rules that had been promulgated in 2020 by the Trump DOL (the Trump Rules). The Biden Rule went into effect on Jan. 30, and explicitly allows retirement plan fiduciaries to consider ESG factors when making investment and shareholder proxy voting decisions.
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