While water conservation lawsuits are rare, they do occur.
Whether CEOs should make new statements about their companies is a matter of debate
“Net water positivity” means that you have more water than you used.
could lead to new types derivative actions against
Jonathan Meer, Wilson Elser partner, says directors and officers
There is a growing trend towards investments that are driven by
Non-financial elements, particularly environmental, social, and governance factors
(ESG) concerns. This, in turn, has led to increased activism
Corporations are now making pledges to their employees.
Water is one of the environmental concerns that shareholders have.
Conservation and improving water quality. The CEOs of 3M & Pepsi
These statements were made in August 2021 and were followed by similar statements.
Promisions from Google and Facebook (now Meta Platforms Inc.
Like statements have been made by companies such as Microsoft, IKEA and IKEA.
Years past also.
Failure to meet ESG promises can sometimes lead to
In derivative and securities litigation against corporations
Their directors and officers (D&Os). Examples include
For corporate responsibility, litigation against D&Os
#MeToo and cybersecurity incidents
Lawsuits to hold corporations responsible for their environmental actions
D&Os are not always the problem.
Against the corporation. Suits over water
Conservation is even less common, but the concern here is whether
These are the new statements of corporate CEOs regarding “net water”
Positivity, or replenishing more water than you are using,
This could lead to new types derivative actions against D&Os.
Shifting Environmental Focus for Corporations
Many corporate statements have been made about the environment in recent years.
We have emphasized strategies to reduce energy consumption or the greenhouse effect.
less on water-related environmental concerns and more on gas emissions That is
Trends are changing. Companies are becoming more frequent.
Have been reporting more about water quality, water withdrawal, etc.
Technology, which relies on water for its growth, is one of the most water-intensive sectors.
On water for cooling data centers, and cryptocurrency mining As
Google has also committed to replenishing 120% of its average daily consumption.
Water consumption across its facilities, data centers.
Meta’s proposal for Meta to be net water-positive is in connection with
Arizona: Building a new solar powered data center
“Restore more than 200 million gallons water per year in the
Colorado River and Salt River basins
Microsoft is testing submerging small data centers in the ocean
Off the coast of Scotland. These tech companies are making an impact on the world.
If their actions are interpreted as being net water positive, they will make pledges to be so
These pledges may not be sufficient or adequate by their investors.
This can lead to litigation.
The subject of shareholder proceedings: Directors and officers
Although environmental issues are not as common, there is still some scrutiny.
In the wake of increased ESG activism, there has been a shift in direction. Prior litigation
D&Os that are not focused on environmental issues are strongly opposed
SEC filings may contain misrepresentations, such as failure to disclose
Corporate exposure about a company’s fossil fuel use
The nexus between non-disclosure of such information and a host
Exxon Mobil suits against D&Os in the 2016 lawsuit are examples
Derivat action Ramirez v. Exxon Mobil Corp.The
2019 shareholder derivative action Re Exxon Mobil Corp.
Derivative LitigationBoth in the same Texas federal
Litigating Water Usage Claims
A few lawsuits have addressed water-positive issues.
Corporations may make claims. One such matter captioned Friends, Artists & Neighbors to Elkhorn
Slough v. California Coastal CommissionIncluded the
Heritage Corporation, which was formed to develop real estate.
The staff at California initially denied this request
Coastal Commission, primarily Heritage’s plan “did”.
not demonstrate positive (or even neutral) groundwater
recharge.” Later, the commission reversed itself and approved.
Heritage’s permit request
The California Sixth District Court of Appeal, however, was open for business on Nov.
15, 2021, This is what we found“The Coastal Commission’s
The environmental review was not complete at the time it was approved
Heritage’s coastal development permit application . That and this
This failure to complete the required environment review before
Approval of the permit application requires approval
Other lawsuits that address water usage issues include
Actions against government agencies One such action is California v. U.S. Department of
Energy,The U.S. Department of Agriculture was challenged
Energy rule creates new product classes for short cycle washers
In the energy conservation program, dryers are included.
The state petitioners claimed that excessive consumption of
Energy and water by short-cycle washers. The U.S. Court of Appeals
For the Second Circuit on May 18, 2021 Refused to StayThe Department of
Energy’s rule stating that there was insufficient evidence
Without a stay, irreparable injury could occur.
Another lawsuit AquAlliance v. U.S. Bureau of
Concerns regarding groundwater pumping programs
California. California. AquAllianceThis was the price that they were charged
“California is facing water shortages due to oversupply
appropriation, and ongoing worsening effects on the climate.”
They were therefore asked to reduce their water consumption and were challenged
Environmental review by defendants and approval of a 2021
Groundwater pumping project. Plaintiffs’ challenge September 2021: Was deniedHowever, they
Future actions against the government may be a sign of future
Private sector water usage lawsuits
D&Os under greater scrutiny
We expect that ESG issues will increase in 2022, including those relating to ESG.
Water usage issues will remain fertile ground.
D&O scrutiny You can also make more public statements.
Additional opportunities for corporations to be more concerned with the environment
These words can be used against them in court.
As D&Os (including those at big technology companies like
Google and Meta continue to make corporate promises about
Water usage, disclosure-related suits RamirezAnd
Exxon MobilThis could be the beginning of climate change
Change-related actions against D&Os
We have already seen lawsuits such as Elkhorn Slough
Refute claims of net water positivity. It is possible to challenge claims about net water positivity, but it is not a certainty.
To be determined if shareholder activists or environmental groups.
In proxy fights or in court, they will speak out against D&Os
The environment is likely to be a factor in court decisions
Companies in the years to follow.
D&Os are bound to loyalty to their companies as well as their employees.
Shareholders to do their best. When creating an ESG, shareholders must do their best.
Directors and staff must demonstrate their commitment for the benefit of their organizations.
Officers should be careful not to make broad statements.
They will not meet.
Original publication by Bloomberg Law
This article is intended as a general overview.
guide to the subject matter It is a good idea to seek specialist advice
Learn more about your particular circumstances.