“Greenwashing” could be the next big litigation against companies that fail to deliver on climate change promises, a senior lawyer has warned.
Speaking at Commercial Risk’s Construction Risk Management conference in London, Simon Konsta, partner at Clyde & Co, said those that promise to make their business green but fail to do so could find themselves on the receiving end of litigation.
If boards break promises on retrofitting their sites it could lead to a rise in D&O-related cases, for example, he said.
“Everyone is jumping on the sustainability bandwagon, but it is simply not possible that all these entities will make good on these promises. It is quite possible that the next systemic liability will be greenwashing,” warned Mr Konsta at the event sponsored by Aon, Belfor, Clyde & Co, CMS, QBE, Sedgwick, Swiss re Corporate Solutions and Zurich.
He told delegates it makes good business sense to move towards a more sustainable agenda, adding that things are likely to move quite quickly.
“As Warren Buffet once said: ‘It’s only when the tide goes out that you discover who’s been swimming naked,’” said Mr Konsta.
He stressed that there are plenty of opportunities for smart companies to capitalise on the changes ahead, but the downside could be increased litigation against those that do not make the changes quickly enough.
“It is important to remember that most activists are not looking backwards for retrospective compensation, but for compensation to buttress themselves in terms of future protection,” noted Mr Konsta.
Companies that do not adapt will be found out and their reputation hit, he continued. This will lead to litigation as shareholders and stakeholders look to recover any subsequent losses, he added.
Mr Konsta had one final warning for companies. “Don’t be too quick to choose to work with one of the many analysts emerging at the moment. Do the due diligence and make sure you are choosing the right partner in this transition – making the wrong choice could land up being just as costly,” he suggested.