State Regulations

Recently, a pair of bills were proposed in the New Hampshire state legislature that would make it a felony to knowingly invest state or taxpayer funds based upon ESG criteria in violation of fiduciary duty. Specifically, the bill in the New Hampshire House of Representatives compels the state retirement fund to “adhere to their fiduciary obligation and not invest with any firm that will invest state retirement funds in investment funds that consider environmental, social, and governance criteria.” Similarly, the bill in the New Hampshire Senate defines investment responsibility to “not include any action taken, or factor considered, by a fiduciary with any purpose whatsoever to further social, political, or ideological interests.” Neither bill has yet been enacted into law, but each would follow a trend of actions by the New Hampshire state government that seek to discourage the use of ESG factors in investing. While this pair of bills is merely the latest entry in continuing efforts by many politicians to counter the recent trend of companies employing ESG criteria when making investments, the threat of criminal sanctions represents a significant escalation in the penalties that could be imposed. Should these New Hampshire bills be enacted into law and have a measurable impact, it is likely that similar laws will be promulgated in ideologically aligned jurisdictions.

Climate Change Tort Litigation

On January 9, 2024, a Delaware state court judge issued an opinion on the various motions to dismiss filed in the case brought by the State of Delaware against the major fossil fuel companies. (This case is one of approximately three dozen lawsuits filed over the past several years alleging tort and consumer protection claims against major fossil fuel companies in connection with greenhouse gas emissions and climate change.) Although the court permitted a number of claims to proceed past the motion to dismiss stage (while dismissing certain claims and defendants), the reasoning the court adopted significantly limited any potential recovery by the State of Delaware from the fossil fuel companies. Specifically, the court held that “damages for injuries resulting from out-of-state or global greenhouse emissions and interstate pollution . . . are beyond the limits of Delaware common law,” even though the court permitted claims to proceed concerning “damages resulting from air pollution originating from sources in Delaware” since “[a]ir pollution prevention and control at the source is the primary responsibility of state and local governments.” In effect, the Delaware court vastly limited the scope of the claims since the State of Delaware could now only pursue tort claims for greenhouse gas emissions that originate from Delaware, a minuscule portion of the global activities of the fossil fuel companies. The significance of this ruling in substantially diminishing the claims at issue has been recognized widely, including by the State of Delaware itself, as it stated in connection with an interlocutory appeal that the decision “significantly limits the State’s recoverable injuries under all of its tort claims.” The ultimate resolution of this issue will have a substantial impact on this and other lawsuits alleging damages based on greenhouse gas emissions and climate change.