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CMS: Advising the Board - ESG Risk

NEDs are under increasing pressure to oversee ESG reporting that is both meaningful and compliant. CMS’ Advising the Board: ESG Risk report provides timely guidance for navigating this complex area - highlighting the key risks linked to ESG disclosures and marketing claims, and what they mean for board-level oversight.

Environmental, social and governance (ESG) related disclosures are a key way for businesses to communicate their ESG performance, strategy and impact to stakeholders. Companies also increasingly make marketing claims, commitments and pledges about ESG factors, or their products’ or services’ ESG credentials and metrics.

While these disclosures are often mandatory, even voluntary ones can offer significant benefits - enhancing reputation, attracting capital and new business, and supporting stakeholder engagement. However, they also bring serious risks, particularly around regulatory and litigation exposure.

Businesses may face regulatory action or legal challenges if disclosures or marketing claims are inaccurate, incomplete, inconsistent, misleading, or non-compliant. This risk is heightened by novel claims from complainants and the possibility of severe regulatory penalties, including turnover-based fines. In many jurisdictions, individual directors and officers may also face personal liability.

CMS’ report offers boards a high-level overview of these issues, with real-life examples to help boards understand where ESG-related risks may arise, and how to respond effectively.

Learn More:

Read the full report here

About CMS:

CMS is a forward-thinking global organisation of independent law firms, boasting over 80 offices in more than 40 countries, and a network of 5,800 lawyers. Combining deep local market knowledge with a broad global perspective, CMS offers dynamic and agile legal solutions to help clients navigate the future with confidence. The firm's focus on social impact, diversity, and sustainability underscores their significance in conversations on governance and future-facing leadership. NEDA are proud to be working in partnership with CMS. 

 

 

 

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