Environmental, Social and Governance (ESG) considerations have received a lot of attention over the past couple of years when it comes to investments. With the growing number of opportunities available on the market, investors are searching for differentiating factors, “responsible investing” being a very attractive one.
This growing demand has naturally brought with it a strong influx of funds and other investment products described as ESG investments. Hoax or reality, it is often hard to decipher whether such products actually meet the required standards. This has caused a lot of skepticism and the feeling that ESG is often nothing more than a label.
When it comes to litigation finance, however, it is often hard to deny its compelling ESG aspect since its very essence has a strong social component to it- providing access to justice. Arguably not all litigation investments will be made in the pursuit of social justice and certain claims will have a much stronger social aspect to them than others, but for investors that want to make “responsible investments”, litigation finance offers plenty of opportunities to do so.
Some of the most notable cases in which litigation funds invest that have a strong ESG component to them are consumer cases. These cases often involve a “David vs. Goliath” type battle, where a great number of individuals (or victims) have been harmed by large corporations and their unethical behavior. Having litigation funders support their cause by financing the costs of litigation, levels the playing field and allows these harmed individuals to seek redress for the damages they have suffered. Litigation funders that take on these cases are inherently pursuing a certain form of social justice and have a notable ESG component to their strategy.
Certain litigation funders have pushed their ESG pursuit even further. Their investment guidelines may mandate that they only take on ESG type cases, such as cases that are in the pursuit of social justice, human rights, or environmental causes, for example. Other funders may take the number of ESG cases in a portfolio under consideration when determining the terms of their funding agreements, to drive the onboarding of more ESG cases. Needless to say, if litigation funders want to include “responsible investing” as part of their fund’s DNA, they have plenty of ways to do so.
Interested in litigation funds? Do not hesitate to contact us at Blue Lakes Advisors
02.10.2024