2021 was a year of notable developments in the field of environmental law and policy. This includes the Biden administration’s policy shifts towards the beginning of the decade, as well as COP26’s deliberations, diplomacy, and diplomacy on climate change towards the end. The popular discourse has been elevated to a higher level than ever before in environmental, governance, and social issues (ESG).
We can’t forget about the Covid-19-related pandemic which continues to add complexity to our lives. Looking back at the events of 2021 helps us set our expectations for the coming year.
Crowell & Moring’s most recent report, which includes news from the executive, legislative, judicial, and foreign spheres, is also used to inform our analysis. SurveyPolling in-house counsel, sustainability specialists, compliance professionals and others about how their companies navigate ESG and environmental performance.
Surprisingly, only around two-thirds (32%) of in-house counsel stated that they were aware of environmental issues and understood their impact on their company’s future.
The only certainty in the rapidly changing landscape of ESG is that things will get more complicated. The following five developmentsencompassing litigation, regulation, policy, disclosures, and supply chainare by no means the sum total of the myriad environmental issues that demand attention, but they capture several important, emerging themes.
Litigation: Beware The Greenwashing Monster
More than half of survey respondents said that their companies share information, such as information on environmental issues they are focused on, metrics from an ESG framework, environmental performance data and forward-looking goals and targets.
False advertising claims can also be made Intensifying, with the plaintiffs bar bringing a never-ending stream of lawsuits claiming companies are engaging in greenwashingover-promising and under-performing regarding their environmental efforts.
These cases are being challenged by the use of new, sophisticated testing methods. They also challenge past assumptions and environmental performance standards. The Federal Trade Commission is poised to ReviewIt Green GuidesIn 2022, for the first time in a decade, we expect companies to continue to feel pressure to prove what they are putting out for public consumption.
Regulation: Can the Government Keep 1.5 Alive?
COP26Many saw it as the last chance to secure firm, accountable emission reduction commitments that would limit global temperature rise to 1.5 C. However, it was disappointing for many who had watched countries struggle for decades with how to reconcile the need of reducing greenhouse gas emissions with the moral imperative to develop the Global South.
And with the U.S. Supreme Court ConsiderThe ability of the Environmental Protection Agency to regulate carbon dioxide emissions in accordance with the Clean Air Act this Spring is being assessed. It is unclear if the U.S. will be able to meet its goals.
However, there is hope for meaningful change as the Biden administration aims to reduce the deficit. methaneAnd HFCsThe greenhouse gases have a higher potential to cause global warming than carbon dioxide. According to the survey results less than half of companies monitor greenhouse gas emissions. The survey results suggest that events in the future could force a reassessment.
Policy: Environmental Justice Influences the Regulatory Agenda
Biden administration has been more deliberate than any other administration in recognising the immense impact that environmental stressors have had on traditionally under-served areas. The administration has thereby VowTo integrate economic opportunity and social justice considerations with environmental enforcement and permitting.
Numerous companies indicated The survey revealed that while companies are aware of their impact on minority communities, far fewer are actually measuring it. Companies may need to collect additional data to anticipate increased interest in local impacts of their operations in the coming year, especially in areas with more concentrated commercial activity.
ESG Disclosures Available
Voluntary disclosure systems under which companies have the option to disclose ESG metricsand, more recently, climate-related financial risks are not new. However, ESG and climate disclosures are becoming more mandatory. Both the European Union (EU) and the United Kingdom have taken significant steps over the past two years in order to require companies to disclose decision-use information.
While the U.S. is still playing catch-up, many anticipate that the Securities and Exchange Commission will soon issue a rule to require climate disclosures. The U.S. is also making use of its leverage. purchasing powerTo impose requirements on companies, regardless of their public-reporting status.
Most survey respondents indicated that they already disclose more data than current law requires. However it remains to be determined if the type and amount of data disclosed will match what may be required in the future.
Monitoring and measuring Supply Chain Sustainability
Recent events, such as the Covid-19 pandemic and other recent events, have made supply-chain issues more prominent in the public consciousness. This has led to increased scrutiny. Most survey respondents identified environmental goals in their supply chains. However, many are facing challenges in implementing them, including cost, tracking difficulties, and reluctant suppliers.
These issues can be particularly difficult for companies with international suppliers or operations. They may look to new tools like AI-powered management software. These tools will become more important than ever, as the disclosure requirements have been implemented.
Predictions about 2022 are possible to be premature as a new Covid-19 concern is emerging. These five environmental issues will remain top of mind for businesses as they navigate and adapt to changing times.
This column does not necessarily reflect The Bureau of National Affairs, Inc.’s opinion.
Information for Authors
Thomas A. LorenzenCrowell & Morings Washington, D.C., partner and co-chair the firm’s Environment & Natural Resources Group. He advises clients on a variety of climate, sustainability, compliance, and other issues. He was previously a Justice Department assistant Section Chief and oversaw the defense for all EPA rulesmakings.
Elizabeth B. DawsonCrowell & Morings Global ESG Advisory Team Leader, she brings her experience as a former DOJ Environment Defense Section trial lawyer to help clients with environmental performance concerns and counseling regarding emerging environmental issues.