War of the words. Are your ESG and business policies fit for purpose?

This month, our ESG legal experts are sharing a range of bite-size ideas to help improve your company’s ESG credentials. Over a series of four blogs in this ‘ESG summer school’ series, they provide insight and suggestions for you to take back to the office post-holiday season and get your September off to a positive start.

This week, we look at reviewing your organisation’s ESG and business policies to ensure that they’re fit for purpose. While your Board will need to formally adopt replacement policies, you should be keeping them under review and thinking about the next cycle of updates – strong governance is the foundation stone for environmental and social success, as discussed in our ESG guide. To ensure you have the right framework and policies in place, our suggestions are:

• Know your policies – as a matter of good practice, the in-house legal team should have copies of the latest versions of all the organisation’s operational policies and know what they say. While the CoSec team and specialist departments may ‘own’ individual policies, it’s important you know where they are, what they say, and whether there are any obvious inconsistencies that you can address in the calm before the storm. Sit down with the subject matter experts among your colleagues and rehearse how workable the procedures are, and how up-to-date the information is.

• Check your net zero pledge – a few years ago many organisations pledged to achieve net zero emissions by a certain date. Some organisations will not yet have published their roadmap for hitting those targets – we recommend checking in with your environment teams and stress testing such pledges to ensure they’re robust and will stand-up to the scrutiny of third parties.

• Is nature the new carbon? – if your environment policy is more than two or three years old, it needs to be reviewed and, in all likelihood, updated. For example, an increasing number of organisations are setting commitments with respect to nature and biodiversity, and you should consider whether this might also be appropriate for your organisation.

• Activism policy – interest in climate matters and social justice issues is at an all-time high. It’s likely that some of your employees will feel so passionately about these causes that they may want to get involved too, but without impacting their position at work. Consider drafting an activism policy (or adapting a publicly-available template) – the certainty that it offers will benefit both your business and its employees. 

• Sustainability due diligence – new rules are coming into force that will require businesses to have clear due diligence policies and procedures relating to the sustainability of their supply chains (covering environmental and social issues, including human rights). Preparing these policies will be a team effort and need you to bring together a number of teams within your business – if things go wrong, they could be reviewed line-by-line in court one day.

• Consider a supplier policy – suppliers are an extension of your organisation: if issues arise and their obligations are not fulfilled as expected, it can adversely impact you. Some organisations have adopted a ‘code of conduct’ or policy that can be incorporated within supplier agreements, but which can also be used to vet and select prospective suppliers. 

• Crisis management policies – if your business has one, when was it last reviewed? All being well, these policies are written, put in a drawer and never need to be put into action; but as an in-house lawyer you are likely to be one of the first people called in the event of a crisis.  How will you deal with an environmental emergency, a rogue tweet from the company account, or a key supplier being subjected to a dawn-raid? While you can’t plan for every eventuality, having a broad plan in place that accounts for a range of scenarios will enable you to keep calm and provide sound counsel to see your organisation through a crisis.

For more ideas from this series, check out our other blogs on setting targeted ESG objectives at a team level and the benefits of setting up internal networks.

All organisations have their attention on ESG factors, as they journey to improve their strategies in a changing world. Our specialist team is fully engaged in developments in this area and is working with a wide range of businesses and other organisations to support their approach to ESG. Comprising of lawyers working across practice areas in our international offices, the team provides a wide spectrum of advice – helping clients to understand their responsibilities and identify where risks and opportunities may lie. Find out more about the team and where it can support on our ESG page.