Trends

A surge in municipal litigation is creating a fiscal crisis for American cities, a key concern for ESG experts. This trend is driven by poor governance, including flawed legislation and an eagerness of city officials to settle lawsuits. The rising costs are linked to claims stemming from neglected infrastructure and a variety of social issues, including workplace harassment and special education needs. These unchecked liabilities, which ultimately fall on taxpayers, highlight significant failures in municipal risk management and threaten the long-term financial sustainability of cities, signaling a critical need for governance reform.

In the aftermath of the 2024 Texas wildfires, utility companies face heightened regulatory and financial risks due to their ESG commitments. The Texas Attorney General is investigating Xcel Energy, alleging that its focus on ESG and DEI priorities led to neglected infrastructure, potentially causing the fires. This probe highlights a growing trend of regulators holding companies accountable for tangible harms and is a warning for investors to scrutinize firms with aggressive ESG goals but weak maintenance practices.

ESG has become a primary factor in both legal risks and opportunities. ESG lawyers specialize in guiding businesses through complex compliance and litigation issues. This includes defending companies against lawsuits over their carbon emissions and public disclosures, advising on supply chain human rights regulations such as the EU's Corporate Sustainability Due Diligence Directive, and handling legal challenges related to misleading "greenwashing" claims. The financial rewards are significant because companies are prepared to pay high fees to avoid costly litigation and reputational harm, making specialized knowledge in this field particularly valuable for lawyers.

Survey indicates rising ESG disputes involving toxic substances, with 27% expecting growth. Experts can testify on health risks from chemicals, drawing from DOJ actions and false advertising cases. Key: Provide evidence on long-term exposure effects, supporting litigation on misleading product safety claims in the US.

Focus on waste in value chains. Experts can testify on pollution control, using regulatory evidence. Takeaways: Quantify environmental damages for litigation.

Employment disputes link to safety in ESG. Experts should analyze restructuring impacts on safety compliance. Takeaways: Use data on union pressures for US workplace risk testimony.