By Pamela Cone
In what can only be described as prophetic, a panelist from South Africa who spoke at the 2nd annual Legal ESG Summit had to participate via candlelight—when the power in Johannesburg was cut just as the session began.
More than 300 representatives from law firms and legal departments worldwide connected October 4-6 for the event.
The fully virtual event featured the latest Environmental, Social, and Governance (ESG) developments, regulations, and practices that are quickly becoming preeminent topics for leadership teams and boards of directors.
Some might think we scripted the South African power outage for effect, but the blackout’s timing was a coincidence. The South African utility that powers the area relies on aging coal-fired power plants that frequently break down. The utility has struggled with unplanned outages, requiring it to implement rolling blackouts to repair systems and replenish generation capacity.
The blackout drove home the point of why many elements of ESG are important and affect all of society.
More than ever, organizations are applying an ESG framework to their strategic plans to create enterprise value. They’re assessing and measuring elements of ESG to manage sustainability risks and create opportunities with clients, suppliers, and employees. It’s clear that:
The way we have always done things is not sustainable or viable for the future.
Those who recognize the need to change, and who lead the change will emerge as victorious rather than as victims.
ESG is not charity. It is not a philosophy, not a political position, and not a program. ESG is a strategic perspective for all business decisions. ESG cannot be a check-the-box compliance exercise. Boards of directors and senior executives must engage and lead.
Summit takeaways
For a taste of the highlights, I offer the following points that resonated the most with me. Note that it’s still possible to register to access the replays of all the sessions on the Legal ESG Summit website.
Insights for law firms
The cost of doing nothing. When considering the cost of and ROI on ESG, remember to consider the cost of doing nothing—which is everything. ESG is a strategic imperative that stands to affect firms’ profitability, reputation, and relationships with clients and employees and other stakeholders.
Stakeholder Engagement is a “listening tour,” NOT a “talking tour!” Everyone needs to feel heard, but not everyone will feel happy with the ultimate, necessary decisions.
Transparency on the journey - good or bad – is expected from all stakeholders.
Data, data, data. Metrics, metrics, metrics. Start collecting NOW! Whether required by regulations or because your firm is part of your clients’ Scope 3, you must know your metrics.
You can’t treasure what you don’t measure.
When it comes to ESG, we all win if we all win. We must collaborate on this journey for all of us, for our society, to meet our objectives.
Every professional services firm is part of its clients’ Scope 3 emissions. So, when it comes to carbon emissions and the environment, you must know your metrics, whether required by regulations or not. Your clients will need the carbon emissions metrics from each of their vendors, including their outside law firms, to meet their Scope 3 reporting requirements.
If you don’t know your firm’s carbon emissions metrics, start collecting data and metrics now so you will have some answers when your clients ask.
Consider your culture. Law firms have cultures, whether by default or by design. It’s possible to analyze the maturity of your culture, deliberately set out to change it, and measure your progress toward that goal.
Embed ESG within your firm. ESG is more of a mindset or a lens through which to advise and serve clients in all areas of practice. Consider how you can you embed ESG performance as a metric in your firm’s success.
§ People, planet, and profit are NOT mutually exclusive aspirations.
§ Compensation plans at law firms must evolve to include ESG performance metrics.
§ The climate crisis is just one of many converging crises facing society today. And all of them need to be considered in your legal advice to clients and in your law firm leadership’s decisions.
§ ESG is not all that different from work around diversity, equity, and inclusion. It is not a single person’s role—but the responsibility of all—and senior management must lead it.
Advice from general counsel and clients to law firms
Greenwashing should really be labeled ESG washing. Too many law firms are practicing greenwashing when declaring their ESG expertise. How many of your lawyers truly have deep ESG expertise?
Know your firm’s values. Your answers do not have to be the same as mine, but when asked about your law firm’s values, you’ll need to have answers.
Understand the liability of inaction. Ignoring the climate crisis when advising clients is a potential liability. What did the lawyers know or what should they have known, and when did they know it?
Do no harm. Law firms make choices all the time, and the clients you work with are a choice you have made. Defending the accused is not the same as helping clients who are doing harm.
Show commitment and transparency. Your firm may not even be aware of the RFPs you are NOT receiving due to lack of (or perceived lack of) ESG commitment, including evidence on your website. Clients are doing research and making choices. Prospective clients and employees are paying attention. And clients and law students have a very low “BS” meter.
Match actions with ESG strategies. My company is aggressively reducing our carbon footprint, yet my outside law firms fly teams of lawyers to a meeting, each carrying thick folders of papers. We are a paperless company! I have lawyers on my team who could NOT attend that same meeting in person because we are restricting air travel to reduce our carbon. Somehow, outside law firms seem oblivious to these points.
Be proactive. Clients are dragging their law firms on this ESG journey. Why are some firms so slow to act and lead on this?
View ESG as an opportunity not a cost. Consider making ESG a part of your firm’s value proposition.
Form partnerships and create a team. If anyone calls themselves an expert in all things ESG, run the other way. It will take a village of experts to truly figure out all the interrelated components of ESG.
Be a trusted advisor. It seems to me that law firms’ current billing model doesn’t support a broader “trusted advisor” approach, which holistic ESG advice requires. Instead, law firms tend to focus on discreet “disclosure advice,” which is only the tip of the iceberg.
Firms are missing opportunities to provide comprehensive, integrated strategies and consulting to meet clients’ needs.
With their broad view of industry trends, law firms are well-positioned to guide their clients as they benchmark ESG performance, address regulatory issues, and navigate transformative new business opportunities.
To quote one of our panelists from the 2nd Annual Legal ESG Summit:
“We must act with URGENCY
and with AGENCY”
Acknowledgments
This event would not have been possible without the willingness of participating firms and faculty to share their insights and experiences. To that end, we must acknowledge the following entities:
Clifford Chance, Mischon de Reya LLP, UNEP, SK Futures Inc, Madison River Group LLC, North by Northwest Environmental Solutions, Gowling wlg, Cozen O’Connor, Prudential Financial, Furia Rubel, McGlinchey Stafford, Phillips Foundation, Latham & Watkins, Realty Income Corporation, Edwards Lifesciences, Qorvo Inc, Dentons, Zurich North America, Stories Evolved, Diageo plc, University of Illinois, Hayhoe Consulting, Statkraft, Baker McKenzie, Lex Solutions, OMS LLP, Corcoran Consulting, Law Firm Sustainability Network, Cooley LLP, Law Students for Climate Accountability, Global Counsel Leaders, Tenneco, AB-InBev, Equitable, Borden Ladner Gervais LLP, Webber Wentzel, Simmons & Simmons, Davis Wright Tremaine, Bates Wells, Farrer & Co, Moye White, and Womble Bond Dickinson, Amity Advisory, and Inside Practice.
Register to access the recordings
For more in depth perspective on ESG in the legal profession, access the recordings.
Future events and offerings:
Coming in late November 2022, ESG Literacy for the Legal Profession: Addressing the growing client demands for enhanced ESG performance, advice, and counsel.
These online training modules will offer an introduction to and overview of the latest developments in ESG for professional service firms. https://www.insidepractice.com/esg-literacy-for-lawyers
To make sure you don’t miss the 3rd Annual Legal ESG Summit, mark your calendars now: October 3-5, 2023.
Stay tuned for forthcoming information on the Legal Foresight Summit, scheduled for March 29-30, 2023. https://www.insidepractice.com/legal-foresight-summit
About the Author
Pamela Cone has more than 30 years of experience in the professional services industry in marketing communications and social impact and sustainability roles.
She is founder and CEO of Amity Advisory, a consultancy that helps professional services firms strengthen their ESG, Social Impact and Sustainability programs beyond transactional to achieve strategic and transformational outcomes.
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