What role should lawyers be playing in the ESG agenda? If managing ESG (environmental, social and governance) factors is about going far beyond regulatory compliance, is this the domain of the lawyer at all? These were some of the questions debated in today's Bristol Law Society interactive webinar on "An Introduction to ESG", where I was delighted to join a panel alongside Professor Bob Lee, Tim Clare of Anthesis, and Tom Venables and Simon Boyle of Landmark Information Group.
The answer is: lawyers can and should be right at the heart of ESG, playing an important role as part of a multi-disciplinary group. Here are some of the take-aways:
- ESG is an evolution of investment strategies, taking into account more sophisticated (ESG) metrics to assess prospects of long term value creation: in short, this is about having more data on which to assess business performance in the longer term, which means ESG is around to stay and will become mainstream.
- ESG factors are necessarily fluid and will evolve further depending on societal issues, environmental concerns and market trends. It follows that there is no counsel of perfection: the important point is that businesses are considering and evaluating the impact of ESG factors on their long term performance, at C-suite level.
- There is increasing regulation to ensure transparency and avoid 'greenwashing': as well as regulatory risks there are wider legal risks (shareholder action, civil claims) and significant financial and reputational risks.
- GCs will be expected to assist the board in navigating these risks (and opportunities).
- The lawyer's skill-set of diligence, analytical methodology, evidence-based assessment and advocacy will be of great assistance in helping to understand and evaluate the risks (and opportunities) and communicate the route forward.
Lawyers cannot be expected to know everything: it is important that lawyers utilise the tools that are available to help map out risks (at Burges Salmon, we like Landmark Information Group's Risk Horizon product) and bring in specialists for particular issues. By working as a team, we can assist our clients to understand the issues that have the most impact on them (whether that is operational performance, or the performance of their investments) and focus our legal skills on understanding and communicating the risks and the opportunities.