What’s next on your ESG agenda? Some views from the top…

I’ve had the pleasure of speaking to a number of senior in-house lawyers (GCs) recently.

Almost every one of them has said that they’re leading on ESG matters for their organisations. No surprise there, as GCs are expert in the general management of risks and dealing with new issues that come across their desk. But there were a number of other interesting matters that came out of those chats that I’d like to share:

• ESG leaders are most effective when they have a hotline to the CEO. ESG really matters and recommendations for change need to go to the top.
• Few GCs are experts in all components of ESG, but everyone I spoke to is relishing the challenge and views it as an opportunity to do good/do the right thing.
• An important exercise is to ‘take the temperature’ of the business early on. Putting issues into one of three categories is important: (1) What must be done to comply with laws? (2) What should be done as a matter of good practice? (3) What could be done with time and budget?
• Stepping back and asking what is driving the ESG push is useful. Is the ESG focus driven by customers, investors or colleagues? In reality, it will be a mixture, but each will have different agendas and understanding those is key.
• Nearly every GC I spoke to thought that ESG was going to be a big part of their lives in the coming year. We didn’t discuss the medium term, but I think we agreed it was here to stay.
• Various tasks were on the ‘to-do’ list – “ESG’ifying” supply chain contracts was high on that list. Looking at emerging climate rules can help establish a framework for this. Data collection, audit powers and collaboration are super important.
• Other low hanging fruit includes a review of operational policies: Do they work? Are they complete? Do they look like a good industry standard?
• Reporting and disclosure is a hot topic for the GCs I spoke with. A starting point is ensuring all reports that are required to be published are actually prepared. When you operate in lots of jurisdictions with different requirements, pick a gold standard and go with that, everywhere.
• GCs weren’t expecting to find perfection. There will be problems that need review and a new approach. ESG leaders who don’t find problems probably need to look more closely.
• Finally, GCs were open in saying they would need external support from advisors with right credentials. For a while – and sadly still to this day – ESG was used (quite wrongly) as a new marketing label for old law, but it has long been much more than that. In the past 18-24 months, it has more obviously developed into a new area of law or practice. Sure, it incorporates areas of practice that were there before, but it has evolved, and will likely continue to do so.