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Financial institutions (FIs) continue to expect cybersecurity and data disputes in the coming year, along with ESG disputes. We will see growth in climate-related litigation against financial institutions from NGOs and activist shareholders. Until recently, claims have focused on the disclosure of climate-related information. However, the trend is now moving to scrutiny of what prudent financial management means. For example, what fiduciary duties are owed when acting as a financial advisor in investment planning or M&A transactions?

A number of factors are driving up the incidence of climate related litigation and enforcement which has been most marked in North America but other regions are now catching up. Financial institutions given their critical place in financing economic activity are increasingly the focus of action. Financial institutions are well advised to prepare for and mitigate the risk, for example, from reviewing their corporate strategies around climate change and carbon reduction to taking note of regulators’ expectations.