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

Last year, we wrote about ClientEarth’s application to the High Court of England and Wales for permission to bring a judicial review claim, alleging that the UK Financial Conduct Authority (FCA) unlawfully approved the IPO prospectus of an energy company. Following the High Court’s dismissal of the application, a renewal hearing was held on 13 December 2023, where the judge again refused permission to bring the judicial review claim.

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.

Click on the PDF to read more.

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