Dive Brief:

• Almost 75% of corporate lawyers and risk leaders call lawsuits related to environmental, social and governance values their biggest concern, according to a survey by global law firm Baker McKenzie.
• The previous two times the firm conducted the annual survey respondents called cyber issues their biggest worry, but that’s no longer the case. “A wider range of organizations now find themselves targeted by [ESG-related] litigation,” the report says, “and a wider range of claimants are bringing it.”
• Concern over employment disputes is also on the rise, in part because of the heightened focus on ESG, the report says. 

Dive Insight:

There’s an anti-ESG movement in the United States but the larger trend is for more, not less, accountability for companies that try to push growth at the expense of these non-business values, according to the report. 

“While there is some resistance to the wave of regulation — at least 19 U.S. states have proposed ‘anti-woke’ legislation — the tide of change largely flows one way,” the report says. 

Among other things, the governments of developing countries and small island nations that see themselves as victims of climate change are getting more aggressive. “A wider range of claimants are bringing [lawsuits],” the report says. “There are currently over 2,000 active climate change cases around the world.”

The non-governmental organizations that are responsible for much of the litigation are getting more creative in the range of complaints they file, even finding antitrust law a useful weapon to wield against companies. “Corporations that evade ESG obligations [are being claimed to] obtain an unfair competitive advantage,” the report says. 

These claimants are drawing on developments in science to say they’re better able to attribute specific actors or actions to specific damage — “e.g., the exact temperature impact of one multinational to global warming over a specific time period,” the report says. 

The environmental part of ESG remains the biggest area of concern, followed by the governance component, but corporate counsel’s concern over the social part has doubled since the law firm conducted its survey the last time. Now almost a quarter of lawyers say the social component — a big driver of employment disputes – is a major worry. 

“In part this may reflect the increasing incorporation of human rights into the ESG agenda,” the report says. “For example, the UN Sustainable Development Goals, which were only introduced in 2015, are now being litigated.”

Development blends into the social component issue if it deprives people of their right to a clean, healthy and sustainable environment, according to ESCAP, a branch of the United Nations. 

Increasingly, activists are setting their sights on lawyers by trying to use their ethical obligations as a means of splitting them apart from the companies they’re hired to protect. The idea is that their ethical obligations hold them to a standard higher than their representation obligations, putting them in conflict if they try to defend a company that’s violating ESG values. 

“Recent calls for lawyers to act as ‘ethical gatekeepers’ present a new threat for organizations defending ESG litigation, risking the erosion of their right to representation,” the report says. 

The report points to a 2023 initiative by the International Bar Association that sought to open debate on whether a lawyer’s ethical behavior should be shaped purely by conformity to the interests of the client. The proposal was withdrawn following criticism, the report says, but the broader movement is clear.

“Similar proposals have been made by national legal bodies,” the report says. 

In another iteration of this trend, Andrés Manuel López Obrador, when he was president of Mexico in 2024, accused lawyers of “treason” for acting for energy firms and other companies. “Lawyers are … under political pressure,” the report says. 

About 600 corporate lawyers in the U.S., U.K., Singapore and Brazil participated in the survey.