I think ESG and an organisations’ purpose are (or should ideally be) closely linked. Legal must be at the table on ESG as a contributor and an advisor, but I would be concerned if the GC was asked to lead on ESG or own the organisation’s ESG program. I am aware that this does happen and that there are some very different views on this, and there are likely some organisations with businesses and strategies where this makes perfect sense.
But in general, for organisations like mine that exist to serve retail clients, I think that assigning ESG to the GC could potentially be a sign that the organisation is looking at ESG as a risk to be managed rather than an opportunity to be seized as part of the organisation’s wider strategy.
I would worry also that the organisation is not mature in its understanding of its place in the wider network of stakeholders that it exists within. For me, the sign of an organisation that understands its mission and its impact is where ESG is fully integrated into the business objectives of the firm, and where everyone in the firm can clearly articulate how the organisations’ activities contribute to meeting ESG goals.
Another sign is where the term “ESG”, which many find quite esoteric, has been translated into the language used within the organisation to describe the goals that the organisation is trying to meet. I think the GC is not best placed to do this and that it sits more naturally with the head of business and/or the head of people and culture.
Absolutely. Taking my role at The Royal Mint, for example, I’m part of the EDI Champions group whose aim is to create, implement and promote EDI-related initiatives across the business. I also head our LGBT+ network (called Enfys).
More general than network participation though, I think in-house lawyers are often called upon either to lead ESG matters, or to at least have some say on them. Rightly or wrongly, us lawyers are often seen as moral consciences of the business – meaning we’re relied on for ethics-related inputs and outputs and can drive sustainable business practices as a result.
Similarly, it’s no secret that ESG has crept-up the ladder of many organisations over the years, meaning it’s now often recognised as a critical business issue. That, in turn, means that many in-house teams are pulled into more projects with an ESG angle compared to the past.
Finally, when a business thinks of its legal team, “corporate governance” and “risk management” often come to mind. It’s difficult to escape ESG (and rightly so) when we think of these two phrases these days, meaning the topic often rears its head when we lead and work on corporate governance/ risk-related matters.
No, this sits much more with HR or a dedicated ESG Team
Ian White and Simon McCall - In-house legal consultants
Our experience is that this is not something that is falling to the GC/In House team to lead. We are expected to support corporate aims and initiatives actively and look to what we can do in our working practices to contribute – but it sits quite firmly with operations and strategy in terms of setting policies and working with industry.
Rebecca Staheli - Head of Competition and Regulatory Law, BBC
The "G" in ESG stands for "Governance" and a lot of ESG is also now underpinned by legislative requirements and/or by commitments that your company has made to its shareholders, to the stock market, to customers, staff or other stakeholders.
So, it is appropriate for a GC's team (particularly if the Corporate Governance and secretariat team form part of the GC's team) to have a prominent and clearly defined role in the company's approach to defining, committing to, delivering and reporting on ESG.
However, the overall approach to ESG, particularly given its political and commercial sensitivities, is a decision for the Board on the recommendation of the CEO and their executive team as it forms an important part of the overall strategic and business plans of the company and touches every division within the company.
Bruce Macmillan – General Counsel