Lawsuits Learn how to correctly treat lawsuits.

The Impaakt Team

8 min Read Time | August 10th 2021

Key takeaways


Companies face lawsuits for several reasons, going from causing consumers’ harm to environmental degradation.


An analysis about one lawsuit takes the risk of being anecdotal. Look to broaden your analysis to the larger issue.


Settlements are not always an admission of guilt, therefore take caution with the risk of defamation when attributing a negative impact on a company that has not formerly been recognised as responsible for these impacts

Tingey injury law firm L4 Y Gu Sg0fxs unsplash 1

What is it?

The term "lawsuit" refers to a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint.

Companies are sued for various reasons, from claims of breach of contract, discrimination, harm caused by the product, environmental degradation, employee injuries, etc.


What is the issue?

A clear ruling must have been made that establishes the company's wrongdoings. Sometimes, analysts use lawsuits to demonstrate negative impacts, but a lawsuit does not establish anything until a sentence has been given (its underlying impact may though, see below).

An analysis written about one specific lawsuit takes the risk of being anecdotal. We don't want to report every lawsuit that a company has lost. This kind of event is only useful if it illustrates a broader issue, e.g., a history of repeated, negligent behaviour towards the environment or society. Unless the lawsuit and underlying wrongdoing is so enormous that it would in itself justify a dedicated analysis, you have to broaden your analysis to the larger issue, not just the specific lawsuit.

Please also note that a case settlement is not always an admission of guilt. Even if it includes a penalty imposed by a regulator such as the EPA, paying out a settlement is not the same legally as being found guilty by a court.

Also, you have to be careful with the risk of defamation when attributing a negative impact on a company that has not formerly been recognised as responsible for these impacts. However, this does not mean that negative impacts can only be documented when a legal prosecution has happened. There are many other reliable sources that we can use that establish in a robust way the responsibility of a company, even if no legal prosecution took place. For example, screen addiction has been documented in numerous studies, and smartphone manufacturers (Apple, Samsung, etc.) have their share of this responsibility even though they have never been sued for this. In this case, it would be possible to document impact using such studies.

SDG poster UN emblem PRINT 2020

SDG Choice

It depends on the impact.

Impact assessment

You should use a lawsuit(s) as an example of the company’s impact through its product or services.

Try to quantify the impact that the company has had on society or the environment by using the Logical Model.

Also, keep in mind:

1/ The breadth of the impact

  • Is the impact local, national, or global?

  • How many people/species are concerned? Thousands? Millions? Billions?

2/ The depth of the impact

  • Is the life of people/biodiversity concerned deeply affected, or does the issue just marginally impact them?

  • Are the changes brought by the issue profoundly changing society or the planet?

3/ The persistence of the impact

  • How long would the impact described last for? Months? Years? Decades?

  • How reversible is the impact described in the impact analysis? Can it be easily stopped/extended?

You can go the extra mile, if relevant, by linking studies to the underlying impact of the lawsuit, to make your analysis robust and the impact value and scale are clear.


Based on the article you've just read, here are some more we think you'd be interested in.

11 Min read

Money Laundering

Learn how to correctly analyse this topic.

9 Min read

Investments’ Social Impacts

8 Min read


Learn how to correctly analyse this topic.

8 Min read

Step 5: Assess scale and value

Learn how to assess the analysis you are writing or reading.

World Green Background Sustainability small

Let’s take action together

With the right investment companies having a positive impact on the planet are able to flourish. Our community forms part of that mission by measuring their impact.

Join Us