Investing in Lawsuits: Falling Short on ESG Claims Is Now a Major Class-Action Business

January 17, 2024

Bloomberg Law reports that investors are securing 25 percent returns or greater (up to hundreds of times) in funds that back litigation against major international corporations that are deemed to have failed in their E or their S or their G responsibilities.

What’s not to like? Trial lawyers win millions of dollars while posing as champions of the downtrodden. Litigation funders get returns that beat the market manyfold. The ESG cartel gets to set standards telling CEOs how high to jump. And NGOs get generous donations so they can continue to canoe down piranha-infested rivers in search of more victims of rapacious capitalism.

It’s progressive heaven!

But I have to wonder if ESG litigation is, like all swords, double-edged.

Consider that in the last few years, the returns on ESG funds have fallen sharply behind returns of traditional funds. ESG proponents described their offerings as generating higher returns over traditional investing, while falling short. Could these same laws be used to sue ESG enablers on behalf of the ordinary investor? There would be tens of millions of plaintiffs and you wouldn’t even have to use a canoe to find them.

So far, such claims have only been pursued by attorneys general acting on behalf of consumers. But the real money would be in a class-action lawsuit against, say, BlackRock, or ISS, Glass Lewis, or Ceres. Maybe some enterprising lawyer might want to pick up on this suggestion. I’d invest in that fund.