ESG, Sustainability and The Law Firm GC

At the end of last year I wrote an article about sustainability (https://www.linkedin.com/pulse/sustainability-risk-opportunity-chris-cayley/) , discussing the risk and opportunity it represents to every business and the role that General Counsel will increasingly play in the ESG and sustainability agenda.

Since writing it, the pace at which the ESG agenda has been developing has been head-swimmingly fast. It’s even led to memes on LinkedIn suggesting that there is nothing faster in the known universe than the growth in interest in ESG! There are many drivers, of course. Change accelerated by the pandemic, the growing call for action to tackle climate change and the focus on diversity and inclusion catalysed by the tragic death of George Floyd last year to name a few.

There is a great deal being written about ESG in the legal profession and there is no doubt that the legal community has a significant role to play. Lawyers have influence and the profession also faces some significant risks and opportunities as we move into this brave new world. A few issues have struck me over the last few months.

The first issue for law firms is putting their own house in order, something we all need to do. More and more firms are looking at their net zero obligations, addressing the S of ESG with mental health, well-being and diversity and inclusion all being in the spotlight along with more focus falling on governance. All firms are paying attention to the regulatory demands and scrutiny they are under, with law firm risk and compliance functions growing fast.

The second issue is reporting. All firms will be painfully aware of the danger of being accused of “greenwashing”. It’s such an emotive issue and there’s a lot of noise out there. Sometimes it feels like we’re at a point where whatever anyone tries to do the immediate assumption is that it’s more about PR than substance. This is where reporting comes in. Not only will firms need to get their own ESG reporting right but there is, of course, a growing obligation on their clients to get it right. We’re already seeing the development of specialist ESG practices within firms which will be kept busy defending clients who have got their reporting wrong or have been unjustly accused of greenwashing. It will be important work as we all know how significant the reputational damage can be for companies and professional services businesses. Furthermore, it’s important that we’re all genuinely doing something and not just talking about it.

The third issue emerging is the growing pressure on the profession to shape the agenda, to move their client base in the right direction and even in some cases to stop working with clients who are behind the curve on ESG and Sustainability. There is no easy answer to this one and many businesses regarded as ‘old economy’ or behind the curve may genuinely be transitioning and changing. The profession has a role to play in advising its clients and shifting the debate in the right direction. In truth, any business that isn’t mindful of ESG issues is risking being left behind and failing; put another way, one hopes it’s also good business to be advising clients of their ESG obligations as well as to be delivering on them oneself.

In conclusion, there’s a lot of work to be done and a role for the profession to play. Corporate General Counsel are already getting involved and the role of law firm General Counsel has evolved significantly as well, as law firms have become bigger and more complicated businesses. The role of law firm General Counsel now has as many strands as it does in a major corporate. So, just as many General Counsel in the financial services sector and in the world of commerce and industry are seizing the opportunity to lead on ESG and sustainability, does it not follow that the General Counsel of a law firm would do the same? They are well placed to as trusted advisers to the business and guardians against risk. They too can play a crucial role in leading the way on this increasingly important and challenging issue. 

This article was first published on LinkedIn in July 2021.