A Plan with a Purpose: Incorporating ESG Into Your Corporate Strategy | World Law Group

Linda D. Garrow

[author: Beth Castro]

ESG. CSR. Acronyms you likely see frequently no matter what industry you’re in. CSR (Corporate Social Responsibility) is how businesses integrate social and sustainability issues into their business operations. ESG (Environmental, Social and Corporate Governance) refers to the three key factors when measuring the sustainability and ethical impact of a business. While both relate to a business’s social responsibility efforts, CSR defines this aspect from a qualitative perspective while ESG defines how it is measured.

What should law firms be doing themselves? How should they be counseling their clients about ESG-related matters?

Soledad Matteozzi of Thinking Beyond Business spoke recently to World Law Group’s Corporate Social Responsibility Forum to help answer these questions. The Forum began in 2020, and in addition to regular meetings at which law firm representatives share CSR best practices, participants helped organize the first network-wide CSR initiative, WLG | impact, during which 40 member firms completed environmental projects in their own communities ranging from a river clean-up to an electronics recycling campaign to carbon reduction competitions to educational webinars. Soledad was the perfect person to address the topic to our Forum having been a partner herself for many years at a World Law Group member firm before starting her consulting business.

Soledad has lived all over the world and past experiences with non-profit corporations led her to develop an interest in learning more about what companies, law firms, and service providers do to address societal and environmental issues. After completing additional education through an ESG program issued by Competent Boards, she met Silvana Skverer and they formed Thinking Beyond Business to help companies incorporate sustainability practices into their businesses. Given Soledad’s background, working with law firms to incorporate ESG into their strategic plans has become an area of focus for her.

Through her membership and collaboration in groups such as the Law Firm Sustainability Network, Conscious Capitalism, and the IBA/ABA, Soledad has seen law firms report that clients are becoming more sophisticated in ESG and need trusted advisors to help them transition their businesses and prepare for future government regulations and client expectations. She also noted that law firms themselves are seen as part of their clients’ supply chains and many of those clients may select suppliers based, in part, on their commitment to ESG and may opt to or be required to report on the ESG activities of their supply chains. In a recent study conducted by the Law Firm Sustainability Network, 87% of respondent law firms reported that potential or existing clients requested that they report on their ESG activities. Sustainable practices also help law firms optimize their resources, as well as attract and retain talent.

One thing she sees among clients is that many either have a strong mission statement but don’t have matching actions, methods of measurement and/or ways to report it, or they are implementing many practices but don’t have a common goal or strategy to make those efforts a cohesive part of the firm’s mission. To put it simply, she said, “If you have a qualitative goal, give it a quantitative target, execute it, measure it, and then report on it.”

She explained that law firms should start by:

  • mapping out and assessing the work they are already doing socially, environmentally, and through their own governance;

  • defining their priorities;

  • developing policies that fit those priorities;

  • generating an action plan/sustainability strategy guided by its mission;

  • finding ways to measure the impact (key performance indicators (KPIs)); and

  • identifying ways in which it can communicate the impact of ESG both internally and externally.

Part of the process will undoubtedly include talking to firm clients about their own ESG programs which may help firms identify key initiatives to champion and thinking about how the whole firm can make the biggest impact based on its skills, community, culture, etc.

When it comes to metrics standards and KPIs, any sustainability strategy needs to be able to measure its impact in a qualitative way in order to be successful and effective for the long term. First, it is crucial to decide what information provides valuable insight into your law firm’s performance and what data is needed in order to give you that information.

You may start by looking into what metrics standards and rating systems your clients and competitors use to benchmark their own programs. Some of the existing voluntary sustainability reporting frameworks and standards used by leading law firms are Evadis, Isometrix, Integrity Next, and The World Economic Stakeholder Capitalism Standard.

When it comes to the types of ESG initiatives she’s seen law firms adopt, some examples include:

  • Environmental: a company’s impact on the environment

    • Set standards of environmental performance and responsible procurement for all firm offices.

    • Reduce carbon emissions, as well as water, energy and paper consumption.

  • Social: a company’s business relationships with its employees, suppliers, clients and community

    • Increase resilience and well-being for firm employees.

    • Improve the gender balance of firm partnership/leadership.

    • Promote diversity, equity, and inclusion both in and out of the workplace.

    • Partner with NGOs and other local organizations.

    • Pro Bono Community Work: e.g. supporting a nonprofit that distributes
      renewable energy to lower-income communities.

  • Governance: a company’s leadership, compensation and compliance

    • Define the scope and definition of ESG for the firm.

    • Strengthen Board/Management oversight of ESG-related policies, guidelines, and progress.

    • Standardize corporate behavior policies across the firm.

When firms have their own comprehensive plans and are “walking the talk,” they are then in a better position to give legal advice to their clients on ESG matters. Firms should look to understand how ESG is affecting existing practice areas and industry sectors, how clients can become more sustainable while complying with new and upcoming regulatory requirements, and what ESG practices could be developed that leverage the firm’s key capabilities and expertise.

Soledad stressed that businesses that tie ESG to their core strategy are not doing so at the risk of profitability, rather they tend to outperform the market. She closed by saying, “there is a business case for doing business sustainably.”

What steps does your firm need to take to accomplish its ESG goals in-house and further develop your own ESG practice?

https://www.jdsupra.com/legalnews/a-plan-with-a-purpose-incorporating-esg-7584991/

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