ESG commitments are a litigation liability - Washington Examiner

Alarm bells should be blaring in C-suites across the country. For too long, executives in glass towers have foisted a woke ESG (environmental, social, and governance) agenda on their employees, suppliers, and customers — all in an attempt to curry favor with leftist activists. And now all the virtue-signaling is about to come back to bite them.

In fact, the same green activists corporate executives have been trying to appease are now using their ESG commitments against them.

The loudest wake-up call came earlier this year when New York Attorney General Letitia James filed a lawsuit against JBS Food USA. Among other complaints, the lawsuit alleges that the world’s largest beef producer has been misleading the public about claims it will achieve net-zero greenhouse gas emissions by 2040. James contends that the company’s pledge “is not feasible given the current scope of the JBS Group’s business operations and its plans to significantly increase beef production.”

Inevitably, the costly litigation that results from this and the other anticipated lawsuits will harm the consumer. Not only will prices increase, but another outcome of the litigation could be the removal of food products from store shelves in order to meet climate commitments that should never have been made in the first place.

Companies, including Target, Ahold Delhaize, and Tyson Foods, have made claims similar to those central to the lawsuit against JBS Food USA. That’s why Consumers’ Research, a nonprofit group, recently sent letters to the companies’ leaders warning them that they are potentially exposed to litigation risk from attorneys general such as New York’s Letitia James. The companies’ unfounded marketing claims could also expose their respective corporations, executives, and directors to legal liability for refusing to recant these ESG commitments at a time when they were aware of the problem and still had the opportunity to reduce or eliminate their exposure.

Target, for example, declared that “we commit to net zero GHG emissions across our enterprise by 2040 to reduce climate impacts across our operations and supply chain.”

National food retailer Ahold Delhaize said: “Our targets for reducing absolute scope 1 and 2 GHG (Green House Gas) emissions are: 38% reduction by 2025 compared to our 2018 baseline, which is one of the KPIs of our Sustainability-Linked Bond; 50% by 2030 compared to a 2018 baseline; Net-zero by 2040, which corresponds to a 90% reduction compared to our 2018 baseline.”

Tyson Foods declared its “ambition is to achieve net-zero GHG emissions, including Scopes 1, 2 and 3 emissions, by 2050.”

The letter from Consumers’ Research urges the officers to act swiftly to protect consumers and their companies by limiting their exposure to massive legal liability.

Corporations have also faced a recent uptick in shareholder derivative suits. Shareholders and elected officials have become increasingly litigious in cases in which corporate ESG virtue-signaling has sacrificed returns or put them at risk.

On Sept. 26, for example, the attorneys general of Iowa, Kansas, Nebraska, and Tennessee sent jointly signed letters of their own, warning the same food retailers and producers cited by Consumers’ Research that their public commitment to irresponsible net-zero climate goals could land them in legal hot water. Because consumers need accurate information to help them with spending decisions, the attorneys general requested the companies to provide an accounting of any and all of their net-zero commitments and pledges.

Additionally, the letter encouraged all three companies to abandon those ESG commitments, stating that they create clear “undue litigation risk.”

There are many more companies in the same position as JBS Food USA, Target, Ahold Delhaize, and Tyson Foods whose reckoning may be on the way.

The JBS lawsuit by Attorney General Letitia James has made plain that ESG and similar commitments represent a clear risk not just to countless food producers, grocers, and food retailers but to the consumers who depend on them. Companies should act with urgency to remove themselves from the incoming wave of ESG litigation and recommit their organizations to a business approach focused squarely on serving their consumers.

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Will Hild is the executive director of Consumers’ Research.