Webinar Recordings from our four-part series: Where the Rubber Meets the Road: The Reality of ESG Claims.

Part 1 - Fight the Good Fight: ESG Pressure Points from the Trenches to Policy and Decision-Makers

I 2pm – 2:05pm: Introduction.
I 2:05pm – 2:25pm: Johannes WESEMANN: Pain points and solutions in developing environmental claims: combining the strategic and result-oriented approach from the private sector and the NGO’s mission.
I 2:25pm – 2:45pm: Zora LYRA: “The role of the G”: How securities law and regulation are connecting with the ESG framework.
I 2:45pm – 3:05pm: Andreas HÖSLI: From Paris to Court Rooms and Board Rooms – the Why’s and How’s of Corporate Climate Litigation. I 3:05pm – 3:15pm: Q&A.

Part 2 - It’s Not Easy Being Green: The Cost of Doing ESG Business

I 2pm – 2:05pm: Introduction.
I 2:05pm – 2:25pm: Isabella KAMINSKI: Financial impact of ESG claims on corporates.
I 2:25pm – 2:45pm: Amanda NEIL: In-house considerations & concerns of ESG risks.
I 2:45pm – 3:05pm: Viren MASCARENHAS: US perspective on EU ESG Directive, audit rights, public interest litigation and anti-trust claims. I 3:05pm – 3:15pm: Q&A.

Climate Change and Investment Arbitration

I 2pm – 2:05pm: Introduction.
I 2:05pm – 2:25pm: Dr. Herfried WÖSS: Damages in climate change investment arbitration.
I 2:25pm – 2:45pm: Kiran N. GORE: The Right to Regulate and Potential ESG Counterclaims in Investment Arbitration. I 2:45pm – 3:05pm: Dr. A. Devin BRAY: Exploring ESG’s role in the shaping of general principles of international law.
I 3:05pm – 3:15pm: Q&A.

Part -4 Climate Change and Commercial Arbitration

I 2pm – 2:05pm: Introduction.
I 2:05pm – 2:25pm: Kevin O’GORMAN: The role of international arbitration in the adjudication of historic mass claims.
I 2:25pm – 2:45pm: Nathalie ALLEN: Why international commercial arbitration is perhaps not the best vehicle for climate change related disputes.I 2:45pm – 3:05pm: Patrick THIEFFRY: Possible adaptations of commercial arbitration for climate disputes resolution.
I 3:05pm – 3:15pm: Q&A.

Webinar Recordings from day 1 of the ESG in EU-Related Supply Chains.

Recording 1 - The Expanding Universe of Climate Change Disputes

Keynote speech: Annette Magnusson Co-Founder Climate Change Counsel

Summary: Annette examines the evolving intersection between climate change and arbitration and litigation. Due to its confidential nature, commercial arbitration offers no clear accessible data on cases with climate change elements, although there are indications of a significant and ongoing increase in cases with “green” elements and efforts to meet the 2050 target under the Paris Agreement of Net Zero. Investment arbitration provides more public information but such disputes represent a small portion of all arbitration cases being filed in the world so are not comparatively insightful. Litigation has shown an exponential increase in disputes involving climate issues since 2015, with evolving legal arguments to claim against actors. Greenwashing cases are also of increasing concern. Given the 2050 Net Zero target, disputes need to be resolved efficiently; international arbitration and mediation offer the procedural flexibility for a sustainable solution.

Recording 2 - The EU Corporate Sustainability Due Diligence Directive and the EU Corporate Sustainability Reporting Directive - Jillian Kirn (Climate Change Counsel) and Adolf Peter, (Shanghai University of Political Science and Law; Wöss & Partners LLC)
Summary: Adolf discussed the impact of the EU Corporate Sustainability Reporting Directive (CSRD) and the Commission’s proposal for a Corporate Sustainability Due Diligence Directive (CSDDD Proposal) on non-EU Entities in relation to GHG emissions. According to Adolf, climate-washing/greenwashing may in particular occur if supply chain leading companies fail to implement an effective (climate) due diligence policy along the supply chain. The CSRD’s reporting obligations and the CSDDD Proposal’s requirement to set up a plan to ensure compliance with the targets of the Paris Agreement would contribute to the reduction of climate-washing because reporting false or insufficient information would certainly result in more stakeholder pressure, trigger additional climate litigations and may even have criminal consequences in some jurisdictions. For this reason, Adolf mentioned that in order to avoid any potential greenwashing-related allegations, companies would be well-advised to include GHG emissions-related targets (including scope 3 emissions encompassing indirect upstream and downstream emissions materializing in the reporting entity’s value chain) in their supply chain-related codes of conduct and their due diligence policy. He in particularly highlighted the danger for companies (including non-EU entities) not to control their suppliers. He mentioned the example of the Chinese electric car manufacturer NIO who is currently entering the EU market. In this context, Adolf noted that NIO had recently entered into an agreement with Shell to jointly construct and operate battery charging and swap stations across China and Europe. Taking into consideration the Hague District Court judgment against Shell in relation to the reduction of Shell’s worldwide GHG emissions, Adolf pointed out that Shell would be well-advised to urge NIO to control its suppliers regarding the generation of GHG emissions.
Recording 3 - Overview on the European Green Deal and the EU Climate Pact - Carmen Marqués Ruiz, (EU Climate Pact)


Carmen gave an overview of the European Green Deal and the European Climate Pact. Carmen underlined that ESG issues are becoming increasingly more important for European companies and citizens. With the European Green Deal, the EU is developing a new policy and regulatory framework which aims at mobilising all the society, including companies, to achieve sustainability. The European Green Deal wants to transform an urgent challenge into a unique opportunity for the EU to reinvent itself and become more competitive in a sustainable way. The European Green Deal aims to transform the EU into a modern, resource-efficient and competitive economy, to ensure no net greenhouse gas emissions by 2050, economic growth is decoupled from the use of resources and no people and places are left behind.
Recording 4 - The Sanctions Mechanism of the EU Corporate Sustainability Due Diligence Directive - Markus P. Beham, (University of Passau, Germany)
Markus discusses the sanctions’ mechanism of the proposed EU Corporate Sustainability Due Diligence Directive (CSDDD), providing an overview of envisioned consequences for companies in violation of future obligations along their supply chains. While the proposal foresees “effective, proportionate and dissuasive” penalties, “including pecuniary penalties”, their exact form has not been specified yet. However, domestic legislation such as the German Supply Chain Act may help inform an educated guess on possible consequences such as the exclusion from public procurement or pecuniary penalties amounting to a maximum of EUR 8 million or 2% of annual global turnover, in addition to skimming off any economic advantage gained from the violation. Furthermore, Markus explains the envisioned civil liability for violations into the domestic legal systems of EU Member States introduced by the CSDDD proposal.
Recording 5 - GHG emissions reductions, The Hague district court decision and Shell – the environmental component of ESG - Leonardo Sempertegui, (OPEC)
Leonardo focused on environmental aspects of ESG and started by explaining that the “E” (Environmental) aspect has been regulated for decades by multiple international environmental and development legal instruments. On 26 May 2021, the The Hague District Court delivered its ruling in the climate change case filed by a group of NGOs and private individuals against Royal Dutch Shell plc (“Shell”). In this case, the court applied an “unwritten standard of care” arising out of extensive sources including the Dutch civil code, political declarations, plans, Human Rights Conventions, scientific reports etc. The court’s expansion of this legal theory to a private entity is unique. In doing so and by replacing the need for a causal link to adjudicate, the calculation of potential damages becomes almost “speculative”. Leonardo explained that the intersecting energy “trilemma” between green & clean vs. secure & reliable vs. affordable & available must be resolved, and that a future source of conflict will be the disparity of energy use in the world. For climate change obligations, the guiding star is the Paris Agreement; this is also the starting point for OPEC countries. The Agreement was signed by all member countries and ratified by all but one of the OPEC member states.
Recording 6 - Supply chain-related due diligence and third-party verifications - Els van Poucke, (Deloitte Legal, Belgium)

Els discussed supply chain-related due diligence and third-party verifications. According to the CSDD, companies are required to integrate due diligence into their corporate policies and to establish and annually update a due diligence policy describing (a) the company’s approach to due diligence; (b) a code of conduct describing the rules and principles of the company (large companies mostly already have such codes); and (c) the processes put in place to implement due diligence.

Recording 7 - Contractually binding ESG-related supplier codes of conduct, contractual cascading and ESG-related contractual clauses - Harald Sippel, (Skrine, Malaysia)
Harald highlighted the German Supply Chain Responsibility Act as the law that stands out internationally at the moment. This is, above all, because the maximum fines purchasers face are 2% of their global annual turnover. Harald put this seemingly small number into perspective by highlighting that on the days prior to the event, he had been in meetings with a German client and determined that this client’s exposure was EUR 320 million (at an annual turnover of EUR 16 billion). It was at this moment that his client fully understood that its ESG-related obligations were not to be taken lightly and that legal advice was money well-spent. Harald also highlighted that in light of the potential exposure and the difficulty to fully control the risks of supplier & sub-supplier due diligence, some companies were already considering not taking on more projects in riskier markets. For those who want to explore lucrative business opportunities, risk management is necessary. One of the – if not the – most important ways to manage the significant exposure that purchasers face is through contractual provisions, which provide them with the necessary protection.
Recording 8 - ESG claims from a funder’s perspective - Simon Knupfer, (Nivalion AG) and Lucas Macedo, (Nivalion AG)

Simon and Lucas discuss ESG claims from a third-party funder’s perspective. Litigation finance can be a suitable solution in supporting meritorious ESG claims by helping to overcome typical hurdles of accessing material information and covering litigation costs. Yet, legal finance is not a “one-stop shop” as several preconditions must be met for the “funding stars to align”. Funders apply the usual criteria for assessing a claim and consider, e.g., predictability and prospects of success, quantum and duration until final resolution. Therefore, other available options such as pro bono legal support initiatives should also be considered by claimholders.

Webinar Recordings from day 2 of the ESG in EU-Related Supply Chains.

Recording 1 - ESG-related damage claims in international commercial – applicable law - Herfried Wöss, (Wöss & Partners)

Summary: Herfried underlined that ESG-related damages claims appear in two different contexts: (a) the tort law aspect under different applicable laws; and (b) the contractual damages aspect. With respect to the former, there are different tort law approaches under different applicable laws. Jurisdiction and legal standing play an important role in this respect. The modifications made by the Council of the European Union to the CSDDD on 30 November 2022 clarify the Directive’s tort law and imperative law approach, referring to damage caused to a natural or legal person, a breach of a duty, the causal link between the damages and the breach of the duty, and fault. The measure of damages under the Directive is “full compensation”, which does not allow for punitive damages.  With respect to contractual damages, Herfried referred to the Contractual Clauses Project for human rights due diligence of the American Bar Association which recommends clauses worded under US law and CISG which are to be inserted in supply contracts, purchase orders or similar documents for the sale of goods. He emphasised the need to apply CISG to mirror-image supply contracts throughout the supply chain in order to allow a pass-through of risks and obligations based on the same applicable law.

Recording 2 - ESG-related supply chain arbitrations – Consolidations and joinders - Adolf Peter, (Shanghai University of Political Science and Law; Wöss & Partners LLC) and Alice Fremuth-Wolf, (Nivalion AG)

Summary: Adolf and Alice Fremuth-Wolf discussed ESG-related supply chain arbitrations – Joinders and Consolidations. Adolf started out by clarifying what is the purpose and goal of joinders and consolidations in arbitration proceedings. Adolf emphasized the ever-increasing interrelatedness between ESG (in particular climate-related issues) and international commercial arbitrations involving multiple parties of multiple tiers (e.g. employer, contractor, subcontractors, lower-tier subcontractors, etc) along international supply chains (supply chain arbitrations). Alice presented the broad joinder provisions and the concise consolidation rules contained in Article 14 and Article 15 of the VIAC Rules 2021 comparing them with the much more detailed provisions in the ICC Arbitration Rules 2021 (Articles 7-9). Adolf thereafter explained the HKIAC (revocation) and SIAC Rules and presented relevant case law as well as a model clause on consolidation and joinder to be inserted into arbitration agreements along the supply chain in order to avoid disputes about consolidations and joinders. Alice concluded by analyzing why the SIAC Cross Institutional Consolidation Protocol 2017 ultimately was not a success in practice.

Recording 3 - Specifics regarding arbitration agreements involving Chinese parties (including sino-foreign joint venture companies and wholly foreign-owned companies incorporated in China) in EU-related supply chains - Xu Guojian, (Shanghai University of Political Science and Law, SGLA Law Firm, China), Adolf Peter, ( Shanghai University of Political Science and Law; Wöss & Partners LLC) and Alice Meissner, (Meissner & Passin Attorneys, Austria)

Alice gave an overview on the differentiation of different types of arbitral awards relevant for the enforcement regime under Chinese procedural law. The distinction is made in China between domestic, foreign-related and foreign arbitral awards. In comparison to foreign-related arbitral awards, foreign awards are in general understood as those rendered in a foreign country. Guojian elaborated on the detailed provisions and case law applicable to the qualification of arbitral awards as foreign-related awards, even though they were issued in China. As explained by Adolf, the parties need to be aware of the distinction when they negotiate supply chain contracts with Chinese suppliers. As to the enforcement of foreign arbitral awards, China has made substantial improvements by its implementation of the so-called “Prior Reporting System” which Alice examined.

Recording 4 - The Trade and Sustainable Development Chapter of the EU/New Zealand Trade Agreement dated 30 June 2022 - Adolf Peter, (Shanghai University of Political Science and Law; Wöss & Partners LLC)

Summary: Adolf discussed the importance of the EU/New Zealand Free Trade Agreement (EU/NZ-FTA) for the enforcement of the climate-related targets contained in the Paris Agreement. He focused on the climate change-related provisions (effective implementation of the Paris Agreement, including commitments with regard to Nationally Determined Contributions) being part of the sustainability chapter. The EU/NZ-FTA would include a unique dispute settlement mechanism for sustainability-related issues with the possibility of sanctions confirmed by a Panel composed of three persons being selected from official lists and sub-lists. Adolf pointed out that violations which seriously jeopardize the achievement of the Paris Agreement’s targets could possibly trigger compensation payments or, more realistically, a party’s suspension of the application of other obligations contained in the EU/NZ-FTA. Finally, he pointed out that the EU/NZ-FTA could be a trendsetting agreement for bilateral free trade agreements concluded by the EU with other nations. This could result in a more effective implementation of the Paris Agreement’s targets.

Recording 5 - Investment arbitration: ESG-related damage claims, the relationship between ESG and investment protection and the role of climate change-related obligations (Paris Agreement) in investment arbitration - Herfried Wöss, (Wöss & Partners) and Nikos Lavranos, (Wöss & Partners LLC; EFILA)

In his presentation on Climate Change and Investment Protection, Herfried analysed (a) the role of the Paris Agreement in investment arbitrations against countries that deliberately destroy renewable energy production; and (b) the relationship between the Paris Agreement and the Fair and Equitable Treatment standard (FET) for the determination of the so-called “illegality threshold”, which is the starting point for the determination of damages under the differential hypothesis or but-for premise. He underlined the role of the Paris Agreement in the USMCA Consultations between the US and Mexico as regards the Mexican Energy Policy, that is likely to trigger a wave of investment arbitrations against Mexico for the deliberate destruction of renewable energy production. As regards the relationship of the Paris Agreement and FET, Herfried referred to Article 31(3) of the Vienna Convention on the Law of Treaties, which provides that when interpreting a treaty any relevant rules of international law applicable to the relations between the parties shall be taken into account. Nikos stated that as regards the level of greening of the revised Energy Charter Treaty (ECT), it should be noted that as in CETA and other recent investment agreements, the ECT now contains an explicit provision on the ‘right to regulate’ of states, to achieve legitimate policy objectives such as the protection of the environment, including climate change mitigation and adaptation, protection of public health, safety or public morals. The revised ECT introduces a new level of flexibility by allowing contracting parties to selectively exempt themselves from certain important provisions of the ECT.

Recording 6 - Challenges and financing of administrative (public) claims relating to ESG/sustainability matters - Michaela Krömer, (Krömer Law Firm, Austria) and Alice Fremuth-Wolf, (Nivalion AG)

Michaela and Alice discussed the challenges and financing of administrative (public) claims relating to ESG/sustainability matters. Michaela sketched out the public and private enforcement mechanism of the CSDD based on the draft of the European Commission. Whilst no final conclusion can yet be drawn, she pointed that out that, based on the present draft, climate protection does not play an important role as it does not constitute an enforcement due diligence duty. Alice concluded by providing insights into the challenges that funding of such public claims pose because they usually lack proceeds that could be shared with a funder. These claims are important and private capital is needed to solve public problems. It is clear that crowd-funding and pro bono legal support will play an important role but also commercial funders will think hard how to be able to support this cause.