As “green values” are still being defined by corporations around the world, public attention is playing a major role in holding corporations accountable for mistreating ESG investment(s). In the United Kingdom, many are calling for directors to be held personally responsible for misapplication of ESG funds. Especially when a company goes into insolvency and there is no capital left due to mismanagement and misappropriation.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
As “green values” are still being defined by corporations around the world, public attention is playing a major role in holding corporations accountable for mistreating ESG investment(s). In the United Kingdom, many are calling for directors to be held personally responsible for misapplication of ESG funds. Especially when a company goes into insolvency and there is no capital left due to mismanagement and misappropriation.
Stewarts Law LLP recently debated standard logic, arguing that directors who knowingly engage ESG abuses to inflate returns may face consequences. Stewarts suggests that directors who operate in such a manner could be ‘on the hook’ for ESG fraud by deceiving shareholders and customers alike.
One such example is ClientEarth, a non-governmental organization which is a shareholder of Royal Dutch Shell PLC. ClientEarth is exploring a potential ESG claim against Shell’s board of directors. To help address this problematic scenario, the United Kingdom has issued financial disclosure recommendations sponsored by the Taskforce for Climate-related Disclosures.
Whatever the case maybe, Stewarts suggests that directors can expect growing scrutiny on ESG investment disclosures in the future. Furthermore, Stewarts recommends that directorships prevent personal liability by well-funded claimants looking to claw back investment dollars lost due to ESG classification.
