ESG Activists Seen Targeting Firms on Net-Zero Emissions Claims

Companies making misleading statements about their progress toward net-zero emissions are set to become targets of climate activists and face potential lawsuits, according to analysts at Jefferies.

While most climate cases so far have been brought against governments, legal action against corporations is increasing, analysts including Luke Sussams wrote in a note Wednesday. They see such climate litigation as being “financially material” to investors.

“There are thousands of commitments to net zero, yet the world has not begun to decarbonize,” the analysts wrote. “We expect there to be a reckoning when investors and consumers become fed up with corporate pledges.”

Companies are coming under increasing scrutiny over their net-zero promises. A report published by the New Climate Institute and Carbon Market Watch this month found that 25 of the world’s most valuable companies have climate plans that are weaker than how they’ve been marketed so far.

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Shell Plc was ordered by a Dutch court last year to slash its carbon emissions by 45% over the next decade. The company is appealing the ruling and the decision will set the precedent for future climate litigation cases, according to the Jefferies analysts.

While the extent of liability is unclear, companies will eventually be held responsible for all emissions across their value chain, they said. Activist investors have also been emboldened to challenge companies after the success of hedge fund Engine No. 1’s push to add three climate-conscious directors to the board of Exxon Mobil Corp.

To contact the reporter on this story:
Lisa Pham in London at lpham14@bloomberg.net

To contact the editors responsible for this story:
Blaise Robinson at brobinson58@bloomberg.net

Neil Chatterjee

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