However, claimants still face high hurdles when bringing climate-related derivative actions, Andrew Short KC & Helen Pugh, of Outer Temple Chambers, write in this week’s NLJ.
They cover recent derivative claims in the High Court, explaining why the Foss v Harbottle test makes it difficult for such claims to succeed. They discuss what worked and what didn’t, including why a particular type of evidence was too vague. One case, McGaughey v USSL, in which two academics sought to force their pension funds to divest from fossil fuel equities, ‘exemplifies the hurdles for those seeking to bring a derivative claim on ESG matters in the future’.
They advise: ‘In divestment claims, the court will expect claimants to identify particular investments which the company ought to divest from, replacement investments it ought to invest in instead, and to provide persuasive evidence of a benefit—likely in most cases to have to be financial—to the company in making this switch’.
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