A plan with a goal: integrating ESG into your business strategy | Global Law Group

[author: Beth Castro]

ESG. CSR. Acronyms you see frequently, regardless of your industry. CSR (corporate social responsibility) is how companies integrate social and sustainability issues into their business operations. ESG (Environmental, Social and Corporate Governance) refers to the three key factors for measuring a company’s sustainability and ethical impact. While both relate to a company’s social responsibility efforts, CSR defines this aspect qualitatively while ESG defines how it is measured.

What should law firms themselves do? How should they advise their clients on ESG-related issues?

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

Soledad has lived all over the world and her past experiences with non-profit corporations have led her to develop an interest in learning more about what corporations, law firms and service providers are doing to resolve social and environmental issues. After taking additional training through an ESG program delivered by knowledgeable advisers, she met Silvana Skverer and they formed Thinking Beyond Business to help companies integrate sustainable development practices into their operations. Given Soledad’s track record, working with law firms to integrate ESG into their strategic plans has become an area of ​​interest for her.

Through its 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 increasingly sophisticated when it comes to 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 considered part of their clients’ supply chains and that many of these clients may select suppliers based, in part, on their commitment to ESG. and may choose or be required to report on ESG activities in their supply chains. In a recent study conducted by the Law Firm Sustainability Network, 87% of law firms surveyed indicated that potential or existing clients have asked them to 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 lack actions, measurement methods and/or ways to report it, or they implement many practices but lack a common goal or strategy to make these efforts a cohesive part of the company’s mission. To put it simply, she said, “If you have a qualitative goal, give it a quantitative goal, execute it, measure it, and then report it.

She explained that law firms should start with:

  • map and assess the work they are already doing socially, environmentally and through their own governance;

  • define their priorities;

  • develop policies that correspond to these priorities;

  • generate a mission-driven sustainability action plan/strategy;

  • finding ways to measure impact (Key Performance Indicators (KPIs)); and

  • identify the means by which it can communicate the impact of ESG both internally and externally.

Part of the process will no doubt be talking to client companies about their own ESG programs, which can help companies identify key initiatives to champion and think about how the whole company can have the most great impact based on their skills, community, culture, etc.

When it comes to measurement standards and key performance indicators, any sustainability strategy must be able to measure its impact qualitatively in order to be successful and effective in the long term. First, it’s crucial to decide what information provides valuable insight into your law firm’s performance and what data is needed to provide you with that insight.

You can start by looking at the measurement standards and rating systems that your customers and competitors use to compare their own programs. Some of the existing voluntary sustainability reporting frameworks and standards used by major law firms are Evadis, Isometrix, Integrity Next and The World Economic Stakeholder Capitalism Standard.

As for the types of ESG initiatives she has seen law firms adopt, here are some examples:

  • Environmental: the impact of a company on the environment

    • Establish environmental performance and responsible sourcing standards 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, customers and community

    • Increase the resilience and well-being of company employees.

    • Improve gender balance in partnership/corporate leadership.

    • Promote diversity, equity and inclusion inside and outside the workplace.

    • Partner with NGOs and other local organizations.

    • Pro Bono Community Work: for example, supporting a non-profit organization that distributes
      renewable energy to low-income communities.

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

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

    • Strengthen board/management oversight of ESG-related policies, guidelines and progress.

    • Standardize corporate behavior policies across the enterprise.

When companies have their own comprehensive plans and “speak up”, then they are in a better position to provide legal advice to their clients on ESG issues. Companies should seek to understand how ESG affects 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 to leverage of the company’s key capabilities and expertise.

Soledad pointed out that companies that link ESG to their core strategy do not do so at profitability risk, but rather tend to outperform the market. She concluded by saying, “there is a business case for doing business sustainably.”

What steps should your company take to achieve its internal ESG objectives and further develop its own ESG practice?

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