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Article

13 Oct 2021

Author:
Sustainable Finance Team, S&P Global Ratings (USA)

Increased global climate change litigation pushes for better company disclosure & targets, says S&P Global Ratings

" Climate Change Litigation: The Case For Better Disclosure And Targets", 6 Oct 2021

… the number of climate change-related court cases filed globally nearly doubled between 2017 and 2020, with more than 1,800 cases filed in 40 countries as of May 2021, three-quarters of which were lodged in the U.S., primarily related to corporate entities and governments …

…That said, the cases are jurisdiction specific, none have yet resulted in awarded damages, and many have yet to be heard on their merits and therefore have outcomes that are inherently uncertain…

… [C]limate change attribution science--which aims to attribute shares of emissions and the associated harmful climate effects to responsible parties with research and modelling--may play an increasingly important role in courtrooms across the globe.

… past cases, even successful ones, have mainly come to fruition because of the now intuitive causal link between high greenhouse gas (GHG) emissions and climate change …

Collectively, the lack of adequate disclosure and partial net zero commitments may expose companies and countries to legal challenges regarding the effectiveness of their net zero commitments…

… key stakeholders are increasingly calling for transparency into companies' and nations' climate-related risks and opportunities. Corporate reporting has increased rapidly in response, with 90% of S&P 500 companies publishing a sustainability report in 2020, up from only 20% in 2011…

… notably… greenwashing claims … allege that companies' marketing materials falsely paint a rosy picture of an issuer's climate risks and strategic positioning…

… standardized reporting frameworks can help stakeholders, such as investors and regulators, understand and comparatively analyze an issuer's governance and strategy framework for managing its climate exposure as well as any quantitative value-at-risk forecasting or scenario analysis that could impact the valuation of its securities.