ESG stands for environmental, social, and governance. All three of these issues are becoming increasingly important, as corporates find themselves under greater scrutiny regarding how they conduct their business.
While there is no definitive list of ESG issues, we list here some of the most cited examples:
A number of countries have introduced – or are looking to introduce – legislation relating to the conditions and circumstances in which corporates do business. Such legislation can cover the corporate itself and those in its supply chain; including suppliers, customers and end-users.
READ THE DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
While human rights and ethical business practices have not been totally overlooked by developed countries in the past, such issues have certainly attracted more attention recently. Various European Union (EU) states are indicating that they are looking to address such issues and, in some cases, have taken steps towards this, whereas at the EU level, the directive on corporate due diligence and corporate accountability is in the pipeline.
As a result, due diligence regarding ESG issues is becoming a major consideration for the business world. Businesses need to ensure they are meeting their ESG obligations.
There is now a greater investor focus on ESG law-related issues and more scrutiny of corporations’ accountability when doing business abroad. Rahman Ravelli has developed significant expertise in ESG-related advisory work and disputes regarding human rights-related issues around the globe. Our ESG team is at the forefront of developments in business and human rights litigation in the UK, Europe and the US. We have a “boots on the ground’’ presence in key jurisdictions.
As a result, Rahman Ravelli is well-equipped to help clients both understand the ESG risks they face and proactively devise and manage appropriate strategies. Our expertise is truly international and cuts across business sectors, from telecommunications, technology and crypto-assets to construction, engineering and the extractive sector.
Our team of senior ESG experts regularly provides advice to help organisations build long-term ESG strategies and performs proactive audits to issue targeted recommendations on specific ESG issues.
In addition to ESG due diligence, the firm’s international team uses its cross-border capacity to support clients facing business and human rights-related matters, either pre- or post-transaction or when litigation arises. Rahman Ravelli has forged key partnerships with the best investigation experts in the field. Our team delivers seamless and integrated advice on these emerging issues and helps clients navigate the increasingly complex – and sometimes competing – legal requirements placed upon them.
Our team assists clients with the full scope of ESG issues, including the following services.
Businesses must regularly conduct thorough due diligence into their impact on the environment, human rights and social governance.
There are various moments when corporations may need to conduct such due diligence:
Rahman Ravelli provides proactive and preventive ESG and human rights due diligence support to assess any potential legal or reputational risks. We recommend remedial action that is designed to mitigate such exposure.
When a corporation is targeted by human rights or ESG risk-related claims, time is of the essence and a prompt, adequate response is needed. Rahman Ravelli's experienced ESG solicitors understand that decisions made in these initial stages may have a significant impact on both the company’s business and its legal exposure.
Our team provides the right combination of experts to help companies handle any potential crisis and make the right choice from the outset. We are adept at conducting large, efficient and to-the-point internal investigations, which may span various jurisdictions and involve complex corporate structures.
Human rights litigation is gathering momentum throughout Europe, especially in France and Germany, where the first major corporations have been targeted by criminal proceedings for their alleged involvement in the most serious human rights violations (such as complicity in crimes against humanity and aiding and abetting forced labour). The legislative framework increasing businesses’ accountability has been significantly reinforced, with recent years seeing the arrival of the UK Modern Slavery Act, the French Duty of Vigilance Law, the German Supply Chain Act, the Dutch Child Labour Law and the EU draft directive on corporate accountability and corporate due diligence.
NGOs are particularly active in attempting to make corporations accountable for their business activities around the world. The first enquiries have emerged relating to “greenwashing”, with disputes brought before French courts and probes launched by the US Securities and Exchange Commission and the German Financial Market Authority (BaFin).
Rahman Ravelli has a substantial presence in the key jurisdictions that are witnessing the first human rights litigation. It also has a unique insight into multijurisdictional litigation. It can provide clients with comprehensive analysis and representation by an experienced ESG lawyer on all ESG-related matters.
ESG stands for Environmental, Social and Governance — the three broad categories of criteria used to assess the sustainability and ethical impact of a business. ESG has grown from a voluntary reporting framework into a source of binding legal obligations in many jurisdictions. Companies face legal risk arising from failure to meet mandatory ESG disclosure requirements, failure to conduct adequate human rights and environmental due diligence, greenwashing claims, shareholder and investor litigation, and regulatory investigations into misleading ESG disclosures.
UK companies face a range of mandatory ESG obligations. These include: climate-related financial disclosure requirements under the Task Force on Climate-related Financial Disclosures (TCFD) framework for listed companies and large private companies; modern slavery reporting obligations under the Modern Slavery Act 2015; human rights and environmental due diligence emerging from the UN Guiding Principles on Business and Human Rights; and sector-specific environmental obligations.
Greenwashing involves making misleading or unsubstantiated claims about the environmental credentials of a product, service, or investment. Legal risks include: FCA enforcement action under its anti-greenwashing rule (which came into force in May 2024) for regulated firms; Competition and Markets Authority action under consumer protection law for misleading environmental claims; private litigation by investors and consumers; and regulatory action in overseas jurisdictions. The FCA's Sustainability Disclosure Requirements (SDR) regime imposes detailed rules on the labelling and marketing of investment products with sustainability claims.
Mandatory human rights due diligence requires companies to identify, prevent, mitigate, and account for their adverse impacts on human rights and the environment throughout their supply chains. The EU Corporate Sustainability Due Diligence Directive (CSDDD) will impose such obligations on large companies with significant EU operations — including UK companies selling into the EU. Some UK companies are also caught by the French Loi de vigilance or the German Supply Chain Due Diligence Act. Failure to conduct adequate due diligence can result in civil liability for harms caused.
Yes. There is a growing body of case law in England and Wales holding UK parent companies potentially liable for the actions of their overseas subsidiaries where the parent exercised sufficient control over the relevant operations. Landmark cases including Lungowe v Vedanta [2019] UKSC 20 and Okpabi v Shell UKSC/2018/0068 established that UK courts can take jurisdiction over claims brought by overseas claimants against UK-domiciled parent companies.
The FCA requires premium-listed commercial companies, and certain standard-listed companies, to include a TCFD-compliant climate-related financial disclosure in their annual reports. The FCA has also introduced its Sustainable Disclosure Requirements (SDR) regime, which includes an anti-greenwashing rule applying to all FCA-authorised firms, as well as sustainability labelling requirements for UK retail investment products.
The Modern Slavery Act 2015 requires certain large businesses (those with a turnover of £36 million or more that supply goods or services in the UK) to publish an annual slavery and human trafficking statement on their website. The statement must describe the steps the business has taken during the financial year to ensure that slavery and human trafficking is not taking place in its business or supply chain, or must state that no such steps have been taken. The Home Office maintains a registry of statements, and there is growing scrutiny of the quality and specificity of disclosures.
The ESG legal landscape is complex, multi-jurisdictional, and changing rapidly. Obligations arise across environmental law, financial regulation, human rights law, company law, and consumer protection — all of which require specialist knowledge. The risk of regulatory enforcement, private litigation, and reputational damage from ESG failures or misleading ESG claims is increasing significantly. Specialist solicitors can advise on compliance with applicable frameworks, defend against greenwashing allegations, manage supply chain risk assessments, and represent clients in ESG-related regulatory investigations or litigation.
