In Q2 2022 Squire Patton Boggs will implement its Environmental, Social and Corporate Governance (ESG) strategy which will set out clear commitments from the firm on environmental, social and corporate governance issues. It will build upon well established, firm-wide policies around corporate governance, Diversity, Equality and Inclusion (DEI) and sustainability. The strategy represents an ambitious commitment by the firm to help to minimise its environmental impact while at the same time working to benefit the societies in which our lawyers operate and supporting our clients on their individual ESG journeys.

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ESG is slowly shaping the way in which businesses, investors and consumers are making decisions. Where once the dominant view was that businesses should prioritise profitability and shareholder returns above all else, over the last few decades there has been an increased recognition that businesses should factor in the interests of wider stakeholders in their operations. More recently, the consensus is that this stakeholder focus is not only a ‘nice to have’, but is actually fundamental to brand, reputation, attractiveness to investors and, therefore, profitability.

In modern times, and after various definitional iterations, this stakeholder-focused view has crystallised into ‘ESG’. The focus on ESG has been accelerated by environmental challenges such as climate change, social movements such as Black Lives Matter and an increased demand by investors, governments and the public that companies are governed in a fair and ethical way.

One of the interesting – and important – recent developments is the steady move towards ESG imposing stricter obligations on businesses, both from a legal and regulatory perspective and from a broader corporate strategy perspective. For a long time, corporate social responsibility was seen as a nice thing to do, but ultimately as something that was discretionary. Some businesses chose to build their brand and strategy around corporate responsibility, other businesses chose not to. This was ultimately the decision of the individual business.

The rise of ESG has changed this. Being a responsible business is no longer an optional matter. We see this with the increased statutory requirements being imposed around carbon reporting as a requirement of company reports, the move toward mandatory reporting of climate and financial risks as part of the Taskforce on Climate-related Financial Disclosures (TCFD) and the implementation of the same reporting around risks concerning nature and biodiversity in the Taskforce on Nature-Related Financial Disclosure (TNFD). Internationally, COP26 ushered in the creation of the International Sustainability Standards Board (ISSB), which will oversee international standard setting on ESG, with clear implications for how businesses approach ESG in terms of strategy. All of this amounts to the fact that being a responsible business is no longer discretionary. ESG is making responsible business a legal and strategic requirement.

The rise of ESG as a core priority is perhaps clearest from the investment space – with figures showing a fourfold increase in ESG investments in 2020 alone [1], and other figures indicating that one third of globally managed assets could be in ESG rated investments by 2025 [2]. The implications of this change on businesses and the private sector in general are profound, and impossible to ignore.

Business partners are looking to be certain that the parties with whom they are doing business are “on the same page” as them when it comes to addressing ESG concerns and this is manifesting as additional reporting and requirements for contractual commitments whether or not there are strict regulatory requirements.

ESG is thus increasingly becoming a key priority for our clients, and a key priority for us here at Squire Patton Boggs as well, both in terms of the legal work we do and the way in which we operate as a business.

In developing our ESG strategy we will further strengthen our ability to support clients on their own ESG journeys. Our lawyers, as risk management experts and corporate advisers, are increasingly being asked by clients to advise on the risks and opportunities around ESG. 

As companies recognise the importance of ESG, we are increasingly having conversations with clients about climate change, Net Zero, supply chain management, equality and diversity, corporate governance and a host of other ESG-related areas. We have experts in environmental law, labour and employment, investigations, defamation law and corporate governance, amongst other areas where ESG is becoming a key priority for General Counsel, and the boardroom. 

While interest in ESG is increasing demand for advice in these areas, we are in the fortunate position to be able to build upon an already strong practice that covers all the legal specialisms that fall within the broad remit of ESG. In this respect, our ESG practice very much builds upon legal work undertaken for a number of years and means clients are supported not only by legal advice but on how to develop their wider ESG approach and strategy.

For more information on how we can help you on your ESG journey please see here.