Environmental, social and governance (ESG) issues are increasingly at the forefront of corporate governance and strategy. To help in-house legal teams better navigate the ever-changing ESG landscape, the Association of Corporate Counsel (ACC) has developed a curated collection of ESG-focused resources for in-house counsel, ESG Resource Center.
The Resource Center provides legal departments with valuable strategies and tools to take a leadership role in identifying, evaluating and capitalizing on ESG opportunities, and to develop a leading ESG risk and compliance culture in their organizations. Some of these resources include articles highlighting the essential role of internal advice, ESG program checklists, policies and practice examples, and developments in the ESG regulatory framework and disclosure requirements around the world.
Mike Madden, Chairman of the Board of ACC Global, said, “The internal legal function and role of the GC has evolved from a purely legal function dealing with matters such as intellectual property enforcement, litigation and regulations – to also support other portfolios such as corporate affairs, communications, procurement and crisis management – as well as ethical issues like ESG.
ESG covers a multitude of topics, including sustainability, cybersecurity, and diversity, equity, and inclusion (DEI), to name a few. Madden notes that these issues are both driving and influenced by an evolving legal and regulatory landscape, market dynamics, and societal expectations.
Material ESG factors are now seen as crucial to a company’s long-term performance through improved reputation, faster economic recovery, value creation and shareholder satisfaction. Accordingly, Madden believes that ESG considerations are proactively integrated into the strategies, operations, and core organizational activities of many companies, regardless of geographic location, industry, or size.
Tanya Khan, ACC Vice President and General Manager for Australia and Asia-Pacific, said Review of business law in Asiathat corporate lawyers are often seen as the moral compass of business.
“By combining their unique understanding of business and legal perspective, they are in a unique position within organizations to influence and lead strategic change,” Khan said. “As such, Chief Legal Officers (CLOs) can have a tremendous impact by providing direction, insight and advice when it comes to identifying new opportunities for organizations and legal departments to leverage the make the most of ESG issues.”
Because ESG considerations are incredibly broad and can impact every aspect of an organization, Khan believes their successful identification, integration and management requires a robust and comprehensive approach to help the company implement an effective strategy, manage disclosures, strengthen relationships with external stakeholders and ensure overall accountability. Business leaders are increasingly recognizing that CLOs are well placed to lead the ESG effort because the legal function sits at the intersection of legal, compliance, reputation, risk and more – often managing or being heavily involved with front-line teams responsible for disclosure, reporting and ethics.
Khan pointed out the 2022 Survey of ACC General Counsel which found that CLOs directly oversee more of the business today than in 2020. CLOs surveyed directly oversee 18 of 21 functions, including compliance, ethics, privacy, government affairs and emerging portfolios such as ESG and DEI.
The survey also found that ESG oversight by the legal department increased from 15% in 2020 to 24% in 2022. The nine percentage point increase was the largest of any function surveyed. Four in 10 CLOs also indicate that ESG issues are forcing companies to improve their compliance efforts to adapt to new environmental regulations and satisfy the growing number of investors and customers who emphasize ESG and responsibility. corporate social. In addition, one in six respondents in public organizations said they had been pressured by investors regarding ESG issues.