Navigating the landscape of the ’anti-ESG’ movement

From ESG as hot topic to the anti-ESG movement; recent developments in the EU and the Netherlands

ESG-initiatives and legislation is on the rise. Examples hereof are the Corporate Sustainability Due Diligence Directive (the CSDDD, see our earlier cheat sheet) and the Corporate Sustainability Reporting Directive (the CSRD, see our earlier blog) on EU level. The increase in ESG legislation also creates more liability and therefore litigation risks, especially for in-scope companies required to meet the requirements as set by this legislation.

In the Netherlands, over the past years we have seen that ESG litigation is on the rise (please see our earlier trend report). Landmark ESG cases such as Shell/Milieudefensie were litigated in the Netherlands via class actions (please see our earlier blog on the judgment in first instance), by which an interest organization can file a collective claim on behalf of a group of injured parties or a public interest (e.g., fighting climate change). A further rise of ESG litigation is notable due to the introduction of the Act on Collective Damages in Class Action (WAMCA), which allows interest organizations to also file a collective claim for monetary damages and profit from a lighter admissibility regime for certain public interest claims.

With the rise of ESG also comes the rise of the so-called 'anti-ESG movement'. This anti-ESG movement is characterized by various actions opposing ESG initiatives, including an increase in anti-ESG litigation. The anti-ESG movement primarily emerged in the U.S., where a growing counter-response against ESG practices began to take shape. In the Netherlands, the anti-ESG movement is not yet as visible as in the U.S.

Still, in the Netherlands we see different interest organizations intervening in ESG litigation cases, to defend and ask attention for the public interests they represent (other than environmental interests). These interventions might be the start of an anti-ESG movement or voice in the Netherlands. For example, in the pending appeal proceedings against Shell brought by interest organization Milieudefensie, two other interest organizations Milieu & Mens and Clintel sought to join the proceedings on Shell’s side. Both Milieudefensie and Milieu & Mens represent citizens and businesses. Clintel represents the interests of individuals who disagree that current climate policies (such as the Paris Agreement) are based on climate science that assumes (in short) a climate crisis. Milieudefensie represents the collective interest of current and future Dutch residents, which interest can be consolidated because each of the Dutch residents will be affected to a certain extent by dangerous climate change. To mitigate the effects of dangerous climate change, Milieudefensie advocates that Shell should align its business model with the goals of the Paris Agreement and therefore reduce its greenhouse gas emissions with 45% by 2023, compared to 2019 levels. In first instance, the District Court of The Hague concluded that Shell is obliged to ensure that trough the Shell group's corporate policy, Shell reduces the greenhouse gas emissions of the Shell group, its suppliers and its customers.

In appeal, Milieu & Mens argued that not only the environment but also the economic interests of citizens should be considered while undertaking the energy transition. Milieu & Mens advocates a balance between the environment and people, with energy security at reasonable prices at its core. Milieu & Mens feared that the judgment in this case against Shell sets a precedent and creates higher energy costs and an (artificial) scarcity of fossil energy. The Court of Appeal of The Hague held that Milieu & Mens has a sufficient interest in joining the proceedings next to Shell, as the judgment affects not only Shell, but also the citizens and businesses that Milieu & Mens represents (please be referred to the judgement). The Court of Appeal of The Hague ruled that Clintel did not have a sufficient interest in joinder because it views on climate science, which differ from the consensus between Shell and Milieudefensie, are outside the scope of the appeal and therefore could not be raised in the pending proceedings (please be referred to the judgement).

In another court case, the District Court of The Hague allowed interest organization Stikstofclaim to join Greenpeace's climate litigation against the Dutch State regarding the State’s policy on nitrogen emissions and nature (please be referred to the judgement). Stikstofclaim’s aim is to defend the interests of the farmers the interest organization represents against the potentially adverse consequences of a judgment in Greenpeace's favour.

Following on from the above, we will further explore recent examples of the anti-ESG movement, particularly focusing on the backlash by a company against ESG shareholder activism through Strategic Lawsuits Against Public Participation (SLAPP). Furthermore, we will highlight the EU's anti-anti-ESG legislation, which aims to counter such SLAPP actions by protecting NGOs and individuals advocating for public interests.

The backlash on ESG shareholder activism via the SLAPP action

The increasing focus on ESG has raised questions about the extent to which shareholders should influence a company’s ESG policies. Some shareholders have a negative approach towards ESG because they are concerned that prioritizing ESG-issues could lead to higher costs, lower short-term profits, or reduced competitiveness, while other shareholders fully support a focus on ESG because they believe that it is important for long-term success of a company. Shareholders can use their shareholder rights to shape or contest a company's ESG policies. Shareholders can – for example – influence a company’s ESG-policies by proposing resolution that address specific environmental or social issues, and voting on these proposal during the annual general meetings of a company. Furthermore, shareholders can take legal action if ESG-commitments are not met, and can advocate for enhanced ESG reporting and transparency.

There are also measures that a company can take to counteract ESG activism by its shareholders. For instance, ExxonMobil attempted to restrict shareholders’ rights to submit and vote on a resolution to put climate science on the company’s agenda. ExxonMobil in response, sued investor group Arjuna and the Dutch association Follow This before a U.S. court by means of a SLAPP action. Under the threat of the SLAPP action and trying to avoid (further) anti-ESG litigation by ExxonMobil, both shareholders withdrew their green resolution proposals.

The EU’s answer to anti-ESG litigation and SLAPP actions: the Anti-SLAPP Directive

The EU has adopted anti-anti-ESG legislation by means of the Strategic Lawsuits Against Public Participation Directive (the Anti-SLAPP Directive). The Anti-SLAPP Directive aims to protect individuals and NGO’s against SLAPP actions (such as the anti-ESG litigation as initiated by ExxonMobil), even if the proceedings are initiated outside the EU.

The Anti-SLAPP Directive entered into effect on 6 May 2024. All EU Member States, have until May 2026 to transpose the Directive into national law. This means that while the Anti-SLAPP Directive has been adopted at EU level, it will take at the latest two years before it is fully implemented and enforceable across all EU Member States. Therefore, the Anti-SLAPP Directive must be implemented in the Netherlands by 6 May 2026. Leading up to the implementation in Dutch law, the supervisory authority of the Dutch legal profession has established a central hotline for both lawyers and direct stakeholders who suspect they are dealing with a SLAPP.

The Anti-SLAPP Directive as a basis for anti-anti-ESG litigation in the Netherlands

Greenpeace, based in the Netherlands, along with over 500 other NGO’s, signed an open letter criticizing oil and gas company Energy Transfer (ET). In response, ET initiated two legal proceedings against Greenpeace in the US, claiming hundreds of millions of dollars damages. Greenpeace believes that these proceedings are to be seen in light of the larger trend of anti-ESG litigation meant to silence their advocacy on public interest issues. While one case was dismissed, the second, a tort action, is still in progress. Greenpeace pushed back by sending a notice of liability to inform ET of Greenpeace’s intention to bring its own anti-anti-ESG action against ET in a Dutch Court to recover all damages and costs it has suffered as a result of the SLAPP action, unless ET withdraws its case and accepts responsibility for the harm Greenpeace has suffered (please see be referred to the notice of liability). Although the Anti-SLAPP Directive has not yet been fully implemented into Dutch law, Greenpeace states that ET’s actions against Greenpeace are unlawful and constitute an abuse of rights. Using these open Dutch law standards, Greenpeace attempts to use the rules that follow from the – not yet enacted – Anti-SLAPP Directive to counter ET’s SLAPP action.

What is next?

The ongoing debates on ESG and the importance thereof show how complex and impactful ESG can be for a company. As ESG related legislation and regulations keep emerging, it is crucial for company and its stakeholders to navigate these challenges carefully.

Interested in learning more about ESG and the risks it might pose to your organization? Feel free to reach out to our ESG litigation team.