Risks in sustainability-related disclosures – reflections on landmark climate litigation actions in the English courts

In this article, we draw out the key lessons from the FCA judicial review case for prospective issuers to bear in mind when including sustainability disclosures in a prospectus.  We also bring to mind key lessons arising from another important climate litigation case, namely ClientEarth’s claim against the directors of Shell plc.  Key lessons discussed in the article:

• the FCA supports the current market practice regarding IPO prospectus disclosures – but the scope and emphasis of disclosable information will likely change over time;
• the High Court is reluctant to interfere in the FCA’s value judgments in prospectus disclosures.  This reluctance is reminiscent of the High Court’s interpretation of directors’ duties in the recent case of ClientEarth v Shell directors;
• implications for boards, investors and sponsors; and
• continued risks of climate litigation and other avenues for climate activism.

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