How will the emergence of ESG litigation impact Dutch businesses? Based on recent regulatory developments and private enforcement actions, this trend report provides practical guidance when dealing with litigation risks related to ESG topics.
Developments in ESG litigation
Recent regulatory developments indicate that ESG will soon have a more formal position in Dutch corporate law. For example, a proposal to update the Dutch Corporate Governance Code and a proposal for an EU directive on corporate sustainability due diligence are only two recent developments. At the same time, the Shell and Urgenda cases has drawn further attention to ESG topics and related private enforcement instruments in the Netherlands.
On 1 January 2020 a new Dutch act came into force clearing the way for collective actions for damages (the Wet Afwikkeling massaschade in een collectieve actie; or WAMCA for short). It is our expectation that in the future the WAMCA will also be used to bring ESG related litigation. Among others such litigation may include topics like zero emission goals, sustainable supply chains, sustainable finance and the disclosures made on these topics.
Mitigating exposure to litigation
With the increased importance of ESG aspects of doing business, companies should generally take a proactive and transparent approach to ESG. Failing to do so may expose the company and its directors to (class action) ESG litigation.