Could you share some examples of innovative ways Herbert Smith Freehills is working with clients in the ESG space?

Silke Goldberg: At Herbert Smith Freehills, we are actively engaging with our clients in the ESG space through innovative tools like our Global ESG Tracker and ESRS Navigator.

With the Global ESG Tracker, we offer clients a monthly subscription service that can deliver concise business friendly updates covering the entire range of ESG issues across the globe. This service is tailored to the specific jurisdictions and sectors that are most relevant to our clients, ensuring they receive the most pertinent information. It’s a strategic resource that helps businesses navigate the complex and ever-changing ESG legal landscape, enabling them to stay informed and compliant with the latest regulations, policies and legal cases. Our clients really value the fact that we are able to tailor the tool to meet their global needs and they receive a comprehensive summary of all important ESG updates in one place.

Sarah Ries-Coward: The ESRS Navigator, is another innovative tool designed to support our clients in translating the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD) into practical language for their business teams to implement effectively. This tool serves as a bridge between the technical complexities of regulatory frameworks and the practical needs of businesses. It offers a clear and concise breakdown of both mandatory and voluntary disclosure requirements under ESRS, alongside the underlying process requirements and expectations. By leveraging our extensive global expertise, we provide targeted, actionable insights that empower our clients to proactively meet these standards, ensuring their business remains compliant and competitive in the evolving ESG landscape.

These tools are just a few examples of how we’re leveraging our global expertise to deliver targeted, actionable insights that empower our clients who are ‘running to stand still’ to remain compliant and competitive in the evolving ESG landscape.

What role does tech play in your ESG advisory services, and can you give an example of how it’s being used to enhance client outcomes?

Jannis Bille: Technology plays a pivotal role in our ESG advisory services at Herbert Smith Freehills, particularly through the use of innovative tools like our CSRD Mapper. This tool exemplifies how we leverage technology to enhance client outcomes by providing a clear and efficient pathway through the complexities of ESG compliance. The CSRD Mapper is designed to help clients navigate the CSRD applicability requirements – who falls in scope and when. By inputting specific company data, the CSRD Mapper can generate a tailored report that provides a definitive answer on which companies are caught, availability of exemptions and relevant reporting timelines.

Our use of technology ensures that our ESG services are not just comprehensive but also highly practical, cost effective and aligned with the specific needs and goals of our clients. It’s a testament to our commitment to staying at the cutting edge of ESG advice and using technology to drive better outcomes for our clients.

How do you vary your ESG guidance to meet the specific needs of clients across different industries?

Silke Goldberg: We aim to break down traditional law firm structures bringing together skills across disciplines to assemble bespoke teams of experts and draw in people with deep sector expertise. This allows us to address the unique ESG-related needs of each project and client.

As a team we have been recognised as a leading firm in ESG and have over 30 years of experience advising clients on ESG and sustainability matters. Our market-leading practice delivers expertise in areas such as ESG-related reporting and disclosures, governance and risk management, business and human rights, climate change-related litigation, transition planning, environment, green and sustainable finance, impact investment, and ESG issues relating to due diligence, the M&A process and supply chains.

How is Herbert Smith Freehills helping clients navigate the evolving regulatory landscape?

Sarah Ries-Coward: We’re dedicated to helping our clients navigate the ever-evolving ESG regulatory landscape and understand that keeping on top of the latest regulations and standards and how they interlink (or not!) is crucial for our clients.

One of the most recent ways we assist our clients is through one of the tools we spoke about above, our Global ESG Tracker, an invaluable resource for keeping up-to-date with global ESG legal and regulatory developments.

In addition to the Global ESG Tracker, we also offer bespoke ESG training programmes to our clients. These training sessions are designed to educate and empower our clients’ teams on the nuances of ESG regulations and best practices.

Can you discuss some of the major global trends in ESG that are particularly impacting your clients, and how you are helping them respond?

Jannis Bille: Some of the major global trends in ESG that are impacting our clients include the increasing emphasis on ESG disclosure and reporting such as the EU CSRD and the International Sustainability Standards Board (ISSB), the push on environmental and human rights due diligence in supply chains such as the Corporate Sustainability Due Diligence Directive (CSDDD), the heightened scrutiny on greenwashing and social washing and the rise in ESG disputes. These trends are influencing our clients across various sectors, prompting them to seek guidance on compliance, due diligence, and reporting requirements. They can arise from various issues, including corporate reporting, such as securities claims, and allegations of ‘greenwashing’, where companies are accused of misrepresenting their environmental practices or impacts or making unsupported sustainability claims for their products. Claims may also be brought against company directors in respect of ESG matters, reflecting the growing accountability for corporate leadership on sustainability issues.

Business and human rights issues are increasingly becoming a focal point within the ESG framework. As companies strive to align their operations with sustainable and ethical practices, the integration of human rights considerations into business responses to environmental challenges is gaining momentum. In addition, ensuring human rights compliance across global and intricate supply chains is difficult. Companies must navigate varying international regulations, local laws and cultural norms while maintaining their human rights standards. This is particularly challenging in sectors like agriculture and manufacturing, where labour rights and working conditions are critical.

Nature and biodiversity issues are becoming another significant aspect, the European Union, for instance, has been proactive in this area, with the introduction of the Regulation on Deforestation-free Products. This regulation is part of a broader effort to ensure that products entering the EU market do not contribute to deforestation and forest degradation. This shift towards integrating nature and biodiversity into ESG considerations is not just a regulatory trend but also a response to the growing awareness and demand from consumers, investors, and other stakeholders for more environmentally responsible business practices.

How has the tone of ESG conversations shifted in the last 12 months?

Silke Goldberg: Over the past year, the tone of ESG conversations has notably shifted from being a ‘nice-to-have’ initiative to a critical aspect of business strategy and operations across the globe. ESG is no longer seen as a peripheral concern but is increasingly integrated into Board level discussion and the core decision-making processes of businesses. This change is driven by a growing recognition of the financial materiality of ESG issues and the realisation that sustainable practices can lead to better long-term outcomes for companies and their stakeholders.

A significant shift has also been the importance of ESG in M&A transactions with ESG factors becoming increasingly significant in due diligence, strategic positioning and financing.

In your experience, where do client ESG concerns come from? Are they a result of internal or external pressures?

Sarah Ries-Coward: In our experience, client ESG concerns stem from a combination of both internal and external pressures. Internally, employees and shareholders are increasingly aware and concerned about ESG issues, recognising the importance of sustainability and ethical practices for long-term business success. They are advocating for change and accountability within their organisations, driving the agenda towards more sustainable and responsible business operations.

Externally, pressures come from customers who are demanding greater transparency and responsibility from the companies they support. Regulators are also playing a significant role, as they introduce stricter ESG-related regulations and reporting requirements. This regulatory landscape is compelling companies to adhere to higher standards of ESG compliance, influencing their strategies and policies.

Both these internal and external forces are shaping the ESG landscape, making it an essential consideration for businesses across all sectors. As a result, companies are increasingly seeking guidance on how to integrate ESG principles into their core strategies to meet the expectations of all stakeholders and to comply with regulatory demands.

Why should lawyers care about ESG?

Jannis Bille: ESG has hit the mainstream in legal services, so lawyers everywhere will already be paying attention. There are several reasons for this, including:

1. compliance with regulation – as we touched on before, our job as lawyers is to help clients navigate the fast-evolving ESG regulatory landscape;
2. risk management – it is also important to help clients mitigate liability and reputational risk not only advising clients on their disclosures but also on their wider ESG strategies and policies;
3. sustainable investment and financing – ESG considerations influence investor decisions and access to capital so we help clients align with ESG criteria to attract investment and secure favourable financing; and
4. commercial contract obligations – likewise, ESG considerations are integral to supply chain management and M&A transactions, so through contract drafting and advising on due diligence, lawyers help clients with compliance and risk mitigation.

The reality is, ESG has become a global trend. Aside from helping clients stay ahead of the curve and gain a competitive advantage, having a strong ESG practice leads to innovation and market differentiation.

Would you say ESG expertise is now more of a priority for companies when instructing a law firm?

Sarah Ries-Coward: Absolutely, ESG expertise has become a critical priority for companies when selecting a law firm. We are witnessing a significant uptick in ESG-specific mandates as well as the influence of ESG in wider mandates, reflecting the growing importance of ESG issues in the corporate world.

Furthermore, when engaging with clients, they are increasingly enquiring about our own ESG credentials and metrics. They want to ensure that their legal partners align with their ESG values and commitments. This scrutiny extends to our internal practices and our approach to ESG in our operations. Clients are not only seeking legal expertise but also looking for firms that practice what they preach in terms of ESG.

What do you see as the future of ESG, and how should companies prepare now to stay ahead of the curve?

Sarah Ries-Coward: The future of ESG is poised to become even more integrated into the core of business operations and strategy. Companies should anticipate a landscape where ESG considerations are not just compliance requirements but also key drivers of innovation, competitive advantage, and long-term sustainability. To stay ahead of the curve, companies should:

• Keep up-to-date with ESG developments: Utilise tools like our Global ESG Tracker to stay updated on legal developments and best practices in ESG. This will help companies remain informed about the evolving ESG landscape and anticipate changes that could impact their business.
• Understand ESG reporting requirements: Companies will need to know which ESG reporting standards apply to their operations and when. It’s crucial to understand what information and data is expected to be reported on and processes that need to be put in place – none of which can happen overnight.
• Develop a robust ESG strategy: Reassess ESG strategy to ensure it aligns with the company’s business goals and stakeholder expectations. This strategy should include clear objectives, actionable steps, and measurable targets.
• Foster an ESG culture: Engage with employees at all levels and integrate ESG considerations across the business. This can include working with law firms to provide ESG training for their teams. This will ensure that internal stakeholders understand the importance of ESG and are equipped to implement ESG principles effectively within the company.
• Leverage technology: Use technology to monitor and manage ESG performance. Digital tools will be critical to help track progress, identify areas for improvement, and report on ESG metrics effectively.
• Collaborate and innovate: Collaborate with industry peers, non-profits, and governmental organisations to drive collective action on ESG issues. Innovation in products, services, and processes can also contribute to better ESG outcomes.

By taking these proactive steps, companies can ensure they are not only prepared for the future of ESG but are also leading the way in sustainable business practices. If you need further guidance on developing and implementing an ESG strategy, our firm is here to assist you.

The post ‘Clients are not only seeking legal expertise but also looking for firms that practice what they preach’ – ESG Q&A: Herbert Smith Freehills appeared first on Legal Business.

Jonathan Bower, partner, planning and infrastructure team leader and partner lead for net zero by 2030 strategy at Womble Bond Dickinson, sets out the case for a clear ESG vision with a focus on inspiring behavioural change

Historical events have often led to transformative changes. The Industrial Revolution was one such moment and, today, we’re on the brink of another significant shift – an environmental, social and governance revolution. Although centuries apart, there are clear parallels between the two, not least the considerable cultural and social change needed to create a revolution.

But what needs to happen to ignite that cultural shift and what can organisations do to empower their workforce and industry?

What does history tell us?

The term ESG was first officially coined in 2004 in a report by the United Nations and, since then, has become a concept that is front of mind for many organisations. However, the principles behind ESG are arguably much older.

The report, called ‘Who Cares Wins’, encouraged business stakeholders to explore and embrace ESG as a long-term business strategy, addressing everyone from managers and directors to investors and analysts. The report also pointed to parallels with the Industrial Revolution, where social and governance were needed to improve labour conditions.

Following this, familiar concepts such as ‘net zero’ and ‘energy transition’ started to appear and are now on their way to becoming global movements where organisations must embrace cultural change to encourage their success both within their organisations and collectively in communities. ESG practices have continued to evolve along with a growing demand for guidance.

Womble Bond Dickinson (WBD) has been ahead of the curve in meeting this demand from business leaders grappling with the concept, offering guidance on sustainable practices before the term ESG sprung into the mainstream. In fact, WBD has been the go-to legal firm for advice on cutting-edge sustainable innovation across new technologies; from onshore wind farms and battery energy storage systems, to heat decarbonisation and energy transmission, working with clients to tick off industry firsts as they go.

The aim? To ensure the future is shaped around ESG principles – not as an afterthought, but as a cornerstone of business strategy. This distinctive approach has earned WBD a reputation as a leader in ESG, driving change that resonates across industries.

Barriers to change

With a raft of new sustainability regulations on the horizon, which will critically impact how companies tell their sustainability story over the next 12 months and beyond, the ESG landscape is becoming increasingly complex.

Current barriers, including skills shortages and the need for retraining, add further complexities requiring policy interventions to put everyone on the right track and give business certainty – at the heart of it is embedding in a supportive ESG culture. The UK’s skills crisis is well known. It reflects deep-seated social issues, such as economic uncertainty and the impact of Brexit and Covid-19. These gaps affect economic growth and exacerbate problems like youth unemployment and income inequality. Addressing these issues requires comprehensive education reform, targeted training, and lifelong learning policies.

Similar reform is needed in driving renewable energy. For example, businesses involved in offshore wind must navigate lengthy bidding processes, securing consents, dealing with marine licences, land rights and grid capacity constraints. WBD has advised on over 30 offshore wind projects in the UK, which will account for 26% of the ambitious 50GW target for offshore wind. Meanwhile, new technologies like hydrogen, demand a long-term strategy to deliver the level of health and safety expertise needed to progress.

Another barrier to consider is that, while a majority of organisations are focused on investment and reporting, there is a need for uniform reporting standards. This means, while businesses know ESG strategies should form the basis of everything they do, there is a need for a clear strategic framework to guide longer-term visions that can overcome barriers.

In the same way that the Industrial Revolution changed society and industry, the need for concrete ESG legislation and guidance is creating a similar demand. A long-term strategic vision is essential to embed ESG principles deeply within organisational practices.

More significantly, progress is also being hindered by cultural barriers. For example, decarbonising heat is a major factor in reaching the UK’s net zero goals, yet it requires a significant shift in people’s perceptions and substantial investment to have the positive impact needed. Renting properties versus ownership impacts how organisations can install heat networks, and the UK faces unique challenges compared to mainland Europe.

Inspiring cultural change is paramount to overcoming the increasing number of challenges we face within ESG. While a strategic framework is important, unless we’re able to change behaviour on a larger scale, we’re unlikely to see ESG practices realising their full potential or, at worst, organisations open themselves up to accusations of ‘ESG washing’.

Catalysing change

Longer term-policies and organisational frameworks take on a vital role in inspiring cultural change. From investment decisions to consumer habits, governments play a critical role, needing to create long-term strategies that transcend political cycles.

One example of how a project based on societal and community benefit can have a positive environmental outcome, is WBD’s recent work supporting Ambition Community Energy (ACE), securing ‘highly commended’ in Planning Magazine’s Planning Awards 2022.

WBD worked with ACE on a pro-bono basis before advising on the planning strategy and securing consent for a 4.2MW community-owned onshore wind turbine in Lawrence Weston, near Bristol, which, at 150m high, is believed to be the tallest onshore wind turbine consented in England. Crucially, the project was delivered ‘by-the-community-for-the-community’ and is expected to generate electricity to power between 3,000 and 4,000 homes a year, saving over two tonnes of carbon dioxide annually.

Profits from energy savings made as part of the project will fund the delivery of the development plan for the community of Lawrence Weston and there will be an on-site Energy Learning Zone for schools and communities.

Projects like these work well to address all three pillars of ESG, benefiting the social economy of areas such as Lawrence Weston and helps contribute to a just transition – supporting communities where energy costs can be disproportionately prohibitive without this form of intervention.

WBD is passionate about using the skills of its teams to deliver sustainable energy solutions which create a long-lasting benefit for local communities. This approach fosters a positive shift in attitude, as communities directly experience the long-term advantages of sustainable energy projects. These local efforts demonstrate the global trend of incorporating sustainability into business practices, showing a shift towards greater environmental responsibility. Such projects highlight the potential for positive impact, and by continuing to empower communities, we can further drive cultural change.

The debate over whether ESG can be described as an evolution or revolution will continue, but one thing is paramount. In a period of political change, evolving legislation and complex challenges, it’s important to seek reliable and trustworthy expertise. Organisations should embrace a cultural shift, weaving sustainability into the fabric of business. As the Industrial Revolution shaped history, the ESG revolution can shape a greener, more prosperous future and just transition for all.

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‘In the old days, it was about having a nice brochure with some green pictures, but then getting on with the serious matter of running our business. We’ve moved way beyond that now – it’s a business fundamental now.’

Norton Rose Fulbright head of environment, health and safety, Europe, Middle East and Asia, Caroline May neatly sums up the transformative shift in attitudes in recent years, with law firms now more attuned than ever to the importance of ESG, both in their capacity as commercial advisers and in terms of their reputation as progressive employers.

Now in its fourth year, the responses from leading law firms to LB’s annual ESG survey indicate concrete progress on both fronts, with more widespread evidence of firms putting together a joined-up client offering, while implementing internal strategies to ensure they are also walking the walk, as their sustainability and social responsibility credentials come under scrutiny from all quarters.

As Michael Watson, head of climate and sustainability advisory at Pinsent Masons, explains: ‘The accelerated transition of sustainability from being a reputational issue – and therefore the domain of the marketing department of a business – to being central to the executive and particularly legal and risk, has been a significant trend this year.’

‘A few years ago, there was a high point of “let’s only advise green”, but I think that’s fundamentally wrong. Clients in the most challenging areas are often the ones most inclined to engage.’
Michael Watson, Pinsent Masons

The ESG gatekeepers

One of the most noticeable trends to emerge from this year’s survey is the growing number of firms putting processes in place to reject work on ESG grounds.

While firms are, unsurprisingly, reluctant to cite specific examples, around half of respondents to the survey provided details of how they are integrating ESG considerations into their client onboarding and business acceptance processes, with ethical labour practices, sustainability standards and governance processes all under the spotlight when determining whether potential clients meet the ESG bar.

Notable examples include Simmons & Simmons, which last year established a Business Acceptance Committee to ensure work ‘aligns with the firm’s values’, with all matters evaluated against ESG criteria such as climate risks or social harms, such as modern slavery.

At Bryan Cave Leighton Paisner (BCLP), high-risk matters and clients are considered by a business acceptance team, and can be escalated to the firm’s ‘Client Council’ – a group of senior partners who weigh up the ESG considerations of taking on work. Since assuming the role in January this year, the firm’s new London-based global senior partner Segun Osuntokun has also established an ESG Action Board and is aiming to formulate a ‘clear and progressive responsible business culture’ across the firm.

Other firms taking concrete steps on this front include Dentons, which over the past two years has established and built up a responsible business team for its UK, Ireland and Middle East (UKIME) business. The firm explicitly includes ESG considerations in its client due diligence processes, turning away work from clients which fall short of established ESG standards, such as environmental crimes or poor employee treatment.

Best intentions, market realities

However, the reality is that for most firms, adherence to the purest of ideals is inevitably unrealistic, and there is a balance to be struck when it comes to clients in carbon-intensive industries – many of which are longstanding clients of top law firms.

Linklaters, for instance – a market-leader for oil, gas and mining transactions – is open about the fact that its commitment to ESG ‘does not mean that it does not work for, or impose limits or quotas on, clients which operate in carbon intensive businesses’, but that ‘the risks in relation to carbon intensive new business should be viewed as part of the usual analysis that is integral to the firm’s business acceptance process’.

The firm argues that clients in carbon intensive industries have an ‘acute’ need for high-quality legal advice, given the challenges in transitioning to sustainable practices, and that ‘it is precisely clients in those industries that most need such expertise and experience’.

‘ESG-related regulation is infectious; it snowballs, and the more that is adopted, the more will emerge.’ Jannis Bille, HSF

And this approach is not unique to Linklaters. As May explains, ‘The energy transition needs to happen, so we view it as providing best practice and advice to these companies – helping them move forward and understand where the market is heading.’

Watson adopts a similar stance. ‘The question I often ask is: what is your agency? Withdrawing your advice isn’t agency; giving it is the tool we have as professional advisers.’

He argues that advising clients in ‘challenging’ areas can be a form of social responsibility. ‘A few years ago, there was a high point of “let’s only advise green”, but I think that’s fundamentally wrong. It’s correct to engage with your whole client base, and we’re finding that clients in the most challenging areas are often the ones most inclined to engage with our ESG advisory capability.

‘If you think about energy transition, you need to be leaning into your client base rather than running away from it. Turning away a client wouldn’t necessarily make any material difference to their transition, so what we do is incorporate ESG factors into our broader client onboarding procedure, and I increasingly think that’s the correct thing to do.’

Even allowing for such considerations, firms are of course acutely aware of reputational risks. Taylor Wessing, for instance, escalates potential reputation-threatening mandates to its reputation committee, which weighs ESG factors in deciding whether to proceed with specific mandates. Jannis Bille, UK head of ESG at Herbert Smith Freehills (HSF), acknowledges this shifting dynamic: ‘Traditionally, lawyers would be quite content to follow the letter of the law and advise based strictly on that. However, with regards to ESG, this isn’t sufficient due to the reputational considerations.’

This underscores how there are always business risks to consider – how a company’s actions are perceived by the public, customers, investors, and stakeholders, and for the younger generation in particular, such considerations are front and centre of their personal and professional choices.

Arthur Cox financial regulation head Robert Cain, who is also the firm’s people partner, notes the importance of ESG credentials in the context of recruitment and talent management: ‘We are finding that Gen Z professionals value meaningful cases, social impact, and alignment with their personal values.’ Such issues are undeniably growing in importance for law firms, in terms of creating a culture that resonates with the values of the next generation.

‘We are finding that Gen Z professionals value meaningful cases, social impact, and alignment with their personal values.’
Robert Cain, Arthur Cox

Sustainable service

The responses to the survey also underline the efforts that firms are making to put together cohesive and convincing multidisciplinary practices to service client needs, which are only increasing amid snowballing ESG concerns.

Rachel Barrett, who leads the ESG practice at Linklaters, says there has been substantial progress on this front in the last year, with new ESG regulations ‘catapulting these issues further into the mainstream’. ‘As lawyers we’ve always had a crucial role, but now there are concrete new rules to address,’ she explains. ‘Clients are increasingly seeking specific support to meet their compliance obligations.’

Typical matters handled by Linklaters’ multidisciplinary practice include governance strategies, regulatory compliance, advice on disclosure requirements covering pay, climate targets, sustainability and D&I, while the firm also holds a number of broad ‘ESG counsel’ roles for major multinational corporates and financial institutions.

Hogan Lovells global ESG head Adrian Walker says a ‘tsunami of global regulation’ has been a key factor behind ESG’s rise up the agenda, with new reporting and disclosure obligations such as the EU Corporate Sustainability Reporting Directive (CSRD) and the UK’s climate disclosure requirements generating increasing volumes of work.

‘The old ESG economy was transactional driven – the game changer in the ESG advisory space is the tsunami of global regulation, which has really changed things for us as a global law firm,’ he explains.

HSF’s Bille adds that, ‘The CSRD has expanded the European lens of sustainability-related reporting from 10,000 to 40,000 companies, with an extra-territorial reach. ESG-related regulation is infectious; it snowballs, and the more that is adopted, the more will emerge,’ he continues.

On the sustainable finance front, Hogan Lovells last year advised the International Finance Corporation and the Bank of the Philippine Islands on its $250m green bond to finance eligible green assets in the Philippines, and is one of many increasingly involved in such pioneering work in this space.

Other firms acting on market-leading sustainable finance work include Ashurst, which earlier this year advised HSBC on the Hong Kong Monetary Authority’s issuance of a digitally native green bond – the world’s first multi-currency digital bond offering – after acting for Goldman Sachs on the world’s first government-issued tokenised green bond in 2023.

Meanwhile, A&O Shearman recently took the Legal 500 ESG Award for Sustainable Finance for its impressive CV in this space, including legacy Allen & Overy’s work with the International Swaps and Derivatives Association to develop template documentation for trading voluntary carbon credits.

Other typical areas of work being handled by ESG practices include the ESG aspects of major transactions, and ‘values-driven litigation’ concerning issues such as greenwashing, environmental and human rights, for example Baker McKenzie’s role for the UN High Commissioner for Refugees in the Supreme Court case which ruled against the UK government’s policy to relocate asylum seekers to Rwanda.

‘As lawyers we’ve always had a crucial role, but now there are concrete new rules to address.’
Rachel Barrett, Linklaters

Connecting the E to the S and G

To meet and manage this rising demand for ESG-focused legal services, over recent years more and more firms have established dedicated ESG practices.

Latham & Watkins is known for being a market-leader on this front, with London partner Paul Davies leading the ESG practice – which combines regulatory, transactional, and litigation practitioners – alongside US co-chairs Sarah Fortt and Betty Moy Huber, both of whom joined the firm in 2022. Typical work handled includes regulatory reporting, compliance, and the ESG aspects of major M&A and private equity transactions.

This March, HSF named new regional leaders to drive its practice forward, with corporate energy specialist Bille taking the UK leadership role, working with existing global practice head Silke Goldberg and newly appointed US and EMEA co-heads – litigator Ben Rubinstein in New York, Frankfurt finance partner Heike Schmitz and Madrid administrative and environmental specialist Iria Calviño.

HSF’s changes came after the firm’s global head of sustainable and impact investment Rebecca Perlman left for Kirkland & Ellis, as the US leader moved to grow its ESG practice.

To integrate ESG across their operations, firms are also investing in training programmes to educate and equip staff on ESG. Linklaters’ ESG Accelerator Programme, which is run in collaboration with the University of Oxford, has trained over 500 of the firm’s lawyers over the past three years, equipping them to provide a comprehensive ESG-focused service.

Barrett elaborates: ‘At Linklaters, we started upskilling our lawyers early. We launched the Accelerator programme in 2020, which included six to eight months’ worth of training and coaching – it’s an intensive programme and a really big investment the firm made in getting our people up the curve, but also to ensure that different practice areas were able to take the time to work out what ESG meant for them.’

Hogan Lovells, meanwhile, operates under the philosophy that ‘every lawyer of all of our 2,800 lawyers is an ESG lawyer’, a bold claim backed up by its ‘You Are An ESG Lawyer’ programme, which provides customised ESG issue-spotting training tailored to each of the firm’s key sectors. ‘We want everyone to be thinking about ESG in every piece of advice that they give,’ Walker explains.

Looking ahead, May says her sustainability goal is ‘to work us out of a job so that we don’t need a separate sustainability committee, because it’s absolutely embedded,’ – a particularly apt goal for the firm’s first head of sustainability.

‘The goal is to work us out of a job so that we don’t need a separate sustainability committee, because it’s absolutely embedded.’
Caroline May, Norton Rose Fulbright

Happy teams, happy schemes

Alongside market-facing considerations, firms are also increasingly aware that they need to ensure their own houses are in order. This shift is evident in the formation of dedicated ESG committees, the appointment of ESG ambassadors to promote integration, and the establishment of robust governance frameworks for effective implementation.

Watson cautions against ESG being ‘placed into the reputational box rather than the strategy box’. ‘There’s a risk that if people are only concerned with the reputational aspects of ESG, they will see less rather than more.’

One such example of ESG considerations being embedded into business can be seen in Eversheds Sutherland, which in 2022 secured unanimous agreement from its international partnership to make an annual investment of at least 1% of net profit – equating to over £2m – in its responsible business programme, which has included the launch of a new global Ethical Code of Conduct, continued efforts to reduce carbon emissions, and the establishment of five-year partnership with the International Rescue Committee to provide pro bono and financial support.

Another trend among firms is an increasing emphasis on supporting employees’ mental health and wellbeing, an issue which was thrust into the spotlight last year by the death of Pinsent Masons partner Vanessa Ford, who had been suffering from an ‘acute mental health crisis’. As Reed Smith London office managing partner Andrew Jenkinson notes: ‘While mental health challenges are not new in the profession, the tragic news of Vanessa’s passing certainly seems to have catalysed the discussion within the UK legal industry.’

Alongside employee assistance programmes, in-house counselling services, and 24/7 access to mental health support, notable initiatives this year have included moves by Reed Smith and Macfarlanes to offer free therapy for their staff.

At Reed Smith, everyone at the firm – including their partners and children, now have access to eight free therapy sessions a year, delivered through external mental health care provider Lyra, while Macfarlanes offers all staff up to seven fully-funded confidential counselling sessions led by qualified psychotherapists and psychologists from Cognacity.

Reed Smith also holds an annual global mental health summit, where lawyers come together with industry professionals to open up about their struggles and strategies for dealing with mental health issues, as part of an effort to tackle what Jenkinson recognises as ‘one of the biggest problems in the industry – the stigma around the topic’.

Underlying numbers

On the question of whether firms’ diversity initiatives are helping to shift the needle on ethnicity and gender statistics, the jury is out – although progress is being made in some quarters.

Of the firms which provided diversity data in our survey, around half increased their percentage of women among the UK lawyer ranks last year, with the overall average in that group continuing to inch up, now standing at 55%. Strong performers include Eversheds, Pinsents, RPC, Simmons and BCLP, all of which have at least 60% female representation among their UK lawyer ranks.

Female partner numbers are also inching up – although only nine firms reported a higher percentage of women among their London partnership this year, the average across firms which provided figures now stands at 30%, up from 29% last year. Of the firms that provided figures, the standouts were Greenberg (42%), CMS (37%) and Mishcon de Reya (37%).

The figures for ethnic diversity are less encouraging, however, despite much talk from firms about how this is crucial to address. Of the firms that provided figures, average BAME headcount among lawyer ranks fell by 1% to 19%, while the equivalent figure for partners also fell 1% to 10% this year.

Our survey also asked firms to provide data on the percentage of their lawyers who are state school educated – and of those which provided figures, four stood out with figures of just over 50% for both lawyers and partners – RPC, Greenberg, Pinsents and Mishcon. At the opposite end of the spectrum were Simmons, with just 17% state school educated lawyers, and Latham with 18%.

‘Clients now want all sorts of information about how diverse we are as a firm and what our approach to sustainability is.’
Farmida Bi, Norton Rose Fulbright

What clients want

While improving these figures is undeniably a key consideration for firms, client demands will inevitably be front and centre. May describes how ESG credentials are now a ‘pre-qualifier’ for some clients. ‘We are often quizzed and rated on our ESG and sustainability performance, irrespective of our legal services. This has been a development over the last five years – we may not stay on a panel if we don’t meet the client’s criteria.’

Norton Rose Fulbright EMEA chair Farmida Bi emphasises this evolving dynamic: ‘Clients – including those with whom we have deep relationships – now want all sorts of information about how diverse we are as a firm and what our approach to sustainability is, for example. The relationship and the values are much more shared than they used to be in the past.’

And while ESG may in the past have been an easy target for non-believers, law firms now have to strike the balance between business and their best intentions, as Hogan Lovells’ Walker sums up: ‘We want to have maximum positive impact for all our stakeholders and clients, but we need to make money as well, because if you don’t, then it’s not sustainable.

‘It’s important that businesses do make money, but if you’re just in it to make money, it’s going to be a pretty bad business – I’m with Henry Ford on that.’ LB

anna.huntley@legalease.co.uk

Go to the ESG Report contents.

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Gen Z – including its lawyers – are often characterised as being overly concerned about the social and political issues that come under the ESG umbrella. It’s an issue that was discussed at Legal Business’s April Enterprise GC event in a panel called: ‘The ideal employer for an idealistic lawyer’, during which one audience member dismissed concerns in the somewhat facetious terms: ‘Everybody’s gone woke!’

The truth is – as always – more nuanced. While Gen Z lawyers do care about ESG issues, this does not mean there is a cultural clash between the generations, even if they are more vocal about their expectations than older generations may have been.

‘ESG comes up a lot in the interview process,’ says Ruth Buchanan, employment partner and training principal at Ashurst. ‘Young lawyers have done their research on our firm, and are interested to hear about our work in the projects and energy transition space, as well as what we are doing internally. We also get a lot of questions around what the firm is doing from a diversity and inclusion perspective – that’s clearly really key for candidates now, but it’s not an area I would have thought to ask about as a young lawyer.’

Johnson Matthey assistant GC and EGC ‘idealistic lawyer’ panellist Natalie Hunt agrees: ‘ESG-related things are talked about a lot more. It comes up in conversations, both internally and in interviews.’

‘If I saw a firm that wasn’t mindful of diversity, that wasn’t doing the cultural minimum, it’d be a red flag,’ says one associate. ‘This is low-hanging fruit – why aren’t you doing these things?’ Diversity in particular emerges as a key concern.

Another associate cites an ex-colleague who left their former firm to go in-house because ‘they felt the firm wasn’t diverse enough’, while a former lawyer who left the profession recalls a sense of unease that while their firm ‘wasn’t at all bad for diversity’, it nonetheless ‘did client work for organisations that were quite open about the fact that they held views that were not positive towards members of the LGBTQ+ community’.

These concerns are important to young lawyers. But they are not overriding. The reference to the ‘minimum’ is telling: poor performance on ESG is an issue because it is a sign of being, in the words of one associate, ‘out of step with the market – especially when we’re advising clients who are facing these same issues’. And firms are increasingly proactive on ESG, with a wealth of initiatives on everything from pro bono work to greener office practices and diverse hiring.

Far from there being a divide though, young lawyers’ concerns and those of more senior colleagues are often in tune with each other. ‘Different generations of lawyers care about ESG in different ways,’ says one associate. ‘For younger lawyers it’s more emotional and value-driven. For lawyers at more senior levels, there’s less of that, but it is absolutely a concern, even if just because it matters to the business.’

‘Everyone wants a work-life balance – but young lawyers are better at talking about it.’
Ruth Buchanan, Ashurst

‘Everyone wants the same thing’

Another complaint frequently raised about members of Gen Z is that they are feckless and workshy – unwilling to come into the office and put in the hours needed to progress in their careers.

Rather than bemoan the younger generation’s attitude towards work-life balance, partners and more senior lawyers spoken to for this feature were positive about some of the strengths of younger lawyers, commenting about how they can improve the office for all ages.

‘Our junior lawyers are often very good at voicing things that our more senior lawyers want too,’ says Buchanan. ‘Everyone wants the same thing: everyone wants a work-life balance that allows them to see their family and friends, take care of themselves, and so on. But young lawyers are better at talking about it. And that’s driven a lot of conversations around things like employee wellbeing.’

Simon Edwards, commercial partner at Trowers & Hamlins and another ‘idealistic lawyers’ panellist, recounts being struck by younger lawyers’ attitude to communication: ‘Gen Z has grown up with social media and mobile phones, and that’s meant that they’re used to sharing their views and having their say on things. They’re more willing to speak their minds than I was as a junior lawyer.’

Hunt notes that prospective candidates increasingly bring up flexible working at interview: ‘We get asked, “Do people come into the office, do they have to come into the office, is it flexible?” We don’t get asked outright what hours people are doing, but we do get asked how the days and the week are structured.’

‘I’m not seeing people wanting to come into the office five days a week,’ adds Edwards, ‘but on the other hand there aren’t many who just want to work from home. Most like to do two to three days in the office, because it allows for a good balance.’

Indeed, while Gen Z may bear the brunt of complaints, they point out that it is often more senior lawyers who put a higher premium on time with their families, while many of the younger cohort are eager to benefit from in-person experience.

Jasmin Chiu, a legal adviser at McArthurGlen who was also on the ‘idealistic lawyers’ panel, tells LB: ‘I’ve noticed that many young lawyers are keen to come into the office more than some other colleagues since we’re at a stage where we’re eager to learn and this can be most easily done in person. I’ve noticed there has been more of a desire to work from home from colleagues who have young families and have moved out of the city.’

This desire to get time in the office with senior colleagues is especially pronounced among the generation that was training or newly qualified during Covid. ‘I trained during the pandemic,’ says one former lawyer. ‘I had quite a poor experience. Doing it remotely was very isolating. I don’t feel that I got a particularly good training experience or felt embedded in a team at all.’

The pandemic also had a negative impact on work-life balance. ‘Things were a lot worse during Covid,’ says one associate who was several years into qualification when lockdown started. ‘You were working longer hours as there was no division between office hours and downtime. If someone emailed you on the weekend in normal times, they might think, “Well, maybe they’re out, they’ll get back to me.” But during Covid there was no excuse.’

Lawyers are split on how far this issue has been resolved since the end of the pandemic. One associate notes positive changes: ‘Firms have done things like introduced sabbatical policies and upped maternity and paternity leave. They’ve become increasingly generous on that.’

But others are more critical: ‘The way the work seeps into your personal life is becoming a lot more pervasive,’ says one former lawyer. ‘It’s so easy to not stop working if you’re doing it remotely. And no-one sees it. I almost felt that I didn’t want to raise it because I didn’t want to look like I wasn’t keeping up.’

As with so much else, the issue may turn on the culture and practices of individual firms. The former lawyer continues: ‘I got told off by one of my line managers once for sending something when I was on annual leave. The attitude was, “We’re great at work-life balance, you shouldn’t be working on annual leave – you should have managed your time better.” It was a weird distortion of what work-life balance was. The fact that I was working on annual leave was taken as my fault. It felt that what I was doing was bad for their image. I really didn’t know what to do with that.’

Law is detail oriented, labour intensive and, for those working in City law firms, extremely well-compensated. As a result, work-life balance is a challenge for lawyers of all levels. ‘I find it hard and I know my colleagues find it hard,’ says Hunt. ‘Over the years I’ve learnt how to switch off, because I know that if I don’t, I suffer, my family suffers, and my work suffers. But if this was my first job I don’t know if I’d have the confidence or the awareness to do that.’

As Edwards notes: ‘Junior lawyers take their lead from a firm’s leaders, so it is really important that those leaders are modelling the right behaviours and staying true to the firm’s culture.’ On both presence in the office and time away from work, firms must set the right example.

‘As young lawyers, we do not always have the luxury of choice when applying to firms or companies.’
Jasmin Chiu, McArthurGlen

Being proactive on these issues is a core part of team culture, argues Nick Wong, a partner in Ashurst’s global loans practice who works with early career lawyers at the firm: ‘There’s a school of thought that says, “As long as I get my job done, why do you care where I do it from?” But I don’t subscribe to that. Part of the job is to be here and to be part of a team, interacting with others in a culture where people enjoy working together. If you want that sense of community, you need to build it and work at it.’

‘It becomes self-selecting’

‘There has always been a tier of people for whom earning the most money possible and working as hard as possible has been the sole focus,’ says Wong. ‘Those people still exist. But there’s also a large and growing tier of people who want more of a balance, and that goes hand in hand with the current generation of young lawyers being brave enough to be open about what they want from their careers.’

For all their concerns about ESG and work-life balance, Gen Z lawyers are – at this point – a small and unique sample within commercial law firms or in-house legal teams. By definition, those already working are the ones who are willing to put in the hours and make the compromises that corporate law requires.

Firms increasingly have procedures in place to allow lawyers to refuse to work on a particular matter if they have ethical or other objections. However, no-one interviewed for this article could recall personally encountering or even hearing about a lawyer turning down work. ‘We’ve never had anybody in my time raise an ethical concern over a certain piece of work,’ says Buchanan.

For one associate, this is because ‘people sort themselves by their value alignments at a much earlier stage’. Put simply: ‘If you have serious ethical objections to working for tobacco companies, for example, you are not going to qualify into a firm that has tobacco clients as major clients.’

Wong concurs: ‘We’ve certainly had people decide they don’t want to go into a certain area,’ he says. ‘It becomes self-selecting.’ In addition to preferences over work-life balance, Wong notes that ethical concerns can factor into these decisions: ‘We’ve had instances where, approaching qualification, Muslim trainees have questioned whether working in certain areas of finance involving interest is compatible with their religious beliefs. We’ve had very open discussions with them about that and fully respect those beliefs. As a full-service firm, we have a wealth of other areas that they can qualify into.’

Another associate puts a slightly different spin on it: ‘It’s not just self-selection. The kind of person who cares enough about political issues to have done anything really controversial as a radical student isn’t going to get past a vetting process, even if they wanted to go into corporate law.’

Interviewees also stressed that Gen Z lawyers were not uncompromising. Chiu offers one explanation for this: ‘Ultimately, as a young trainee or lawyer, we do not always have the luxury of choice when applying to firms or companies.’ Such concerns are more likely to play into later career decisions, she argues: ‘Young lawyers put weight on these factors more than older generations when it comes to choosing to remain and progress in a particular firm or company.’

‘Gen Z has grown up with social media and mobiles – they’re more willing to speak their minds than I was as a junior lawyer.’
Simon Edwards, Trowers & Hamlins

Gen Z lawyers are also regarded as more commercial and career-oriented. ‘There has been a generational shift in terms of expectations, and also in terms of how savvy people are in mapping their careers at a very early stage,’ says Buchanan.

Wong concurs: ‘Career progression is important. Young lawyers are very switched on to what they want out of their career. They’re constantly thinking about where they want to be in two, five or ten years.’

Edwards notes that the small size of the Gen Z lawyers cohort and the youth of its members makes generalisation difficult, but makes a similar point: ‘People are more willing to move, whether that’s to a competitor firm, to go in-house, or even to get more experience in the business outside of the law.’

‘Younger lawyers aren’t going to stick in something that’s not right for them,’ he continues. ‘They say, “If I don’t like the culture or what the firm is doing on ESG, I’ll move on.” Employers need to make sure they’re providing an environment in which people want to stay. It’s not enough to just have the carrot of the money. You need to provide a rounded experience if you want to keep people.’

Partners are alive to these issues, and firms are increasingly considering them when it comes to working with and mentoring their young lawyers.

But what may be most interesting is to see what changes as the number of Gen Z lawyers grows and as members of the cohort become more senior. Hunt ends on a note of cautious optimism: ‘Yes, this profession might be one with sometimes slightly insane hours, lots of stress, et cetera, but I do think (and hope) it’s improving, especially in terms of the respect for people’s mental health within the profession. I feel that over the next five, ten, fifteen years ,the legal profession, in particular private practice, will need to change. I just don’t think it’s sustainable.’ LB

alex.ryan@legalease.co.uk

Go to the ESG Report contents.

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On 29-30 April, more than 200 senior in-house counsel gathered at the Hilton London Wembley for the seventh annual Enterprise GC event.

The event – which was sponsored by Walker Morris, Luminance, Lex Mundi, SSQ, EY, Taylor Wessing, Trowers & Hamlins, Cilex, Flex Legal, Winston & Strawn, Thomson Reuters and LexisNexis – saw two packed days of dynamic sessions, panel discussions and networking, bringing together top in-house professionals and speakers from broader business and academic communities to discuss the evolving role of GCs.

Sandra Wachter, professor of technology and regulation at the Oxford Internet Institute at the University of Oxford, kicked off the event with a timely and engaging keynote on bias, ethics and risks relating to artificial intelligence, questioning whether AI can be trusted and what in-house lawyers need to know when adopting such technology. She highlighted the limitations and risks of large language models and AI-powered chatbots in legal and financial analysis, stressing the need for responsible evaluation and use of these technologies.

Following this, Taylor Wessing partner Christopher Jeffery and counsel Martijn Loth hosted a panel featuring Daniel Jarman, head of ethics, compliance, and insurance at Deliveroo, and Caroline Stockwell, head of legal at Amicus Therapeutics, which centred around the practical applications of AI in business, including operational efficiency and bias reduction, stressing the importance of robust governance and ethical frameworks.

After a short networking session and coffee break, participants then split off into various round table discussions encompassing topics such as enhancing the role of in-house legal teams in IT projects, the strategic role of in-house lawyers, maximising legal team efficiency, and how GCs are shaping corporate strategy.

In the last session before lunch, Michelle T Davies, global head of sustainability at EY Law, led a panel on regulatory considerations around supply chains and greenwashing. The panel included Mark Maurice-Jones, general counsel (GC) and compliance officer at Nestlé; Dr Linn Anker-Sørensen, director and global lead of sustainability regulatory at EY Law; Melissa Strong, head of insurance, pensions, and investments litigation at Lloyds Banking Group; and Anthony Kenny, assistant GC at GSK. They emphasised the increasing importance of sustainability disclosure and transition planning, underlining transparency, robustness, and collaboration.

The afternoon kicked off with an in-depth panel on cross-border legal risk management, hosted by Eric Staal, vice president of global markets at Lex Mundi, who discussed emerging challenges such as lockdown impacts, political talent shortages, and cyber risks. Panellists including Graham Cox, programme director at Boundaries Edge Ltd; Katarina Nilsson, vice president of people and culture, communication and SHEQ at Epiroc; and Graham Vanhegan, chief legal officer at The Weir Group, shared insights on dual sourcing, crisis management, and agility in global crises.

Additional round tables included an AI workshop with Taylor Wessing and a popular Legal 500-led session exploring concerns and challenges facing today’s GC.

The day concluded with two final panels – Grace Haselden, commercial director at Luminance, and Sam Al-Ani, legal counsel at Rightmove, discussed AI’s impact on document management and commercial processes, followed by a discussion moderated by the Legal 500’s head of global research and reporting Georgina Stanley, who talked to Maaike de Bie, group GC and company secretary at Vodafone; NatWest lawyer Lisa Ardley-Price; and SSQ’s Laura Field, who offered practical tips on navigating in-house career development, advancing to senior roles, and transitioning beyond legal positions.

Day one ended with a gala dinner featuring live music, a three-course meal, and networking drinks at the hotel’s Sky Bar.

Day two shifted from AI to ESG, with Jennifer Nadel, co-director of Compassion in Politics, delivering a keynote on the vital role of compassion in politics and ethics. Using personal and historical examples like the Grenfell Tower fire, she emphasised the urgency of embedding ESG principles across society and urged collective action to bridge the moral gap and foster a compassionate world.

The day’s first panel, moderated by Ben Bruton, partner at Winston & Strawn, explored dispute resolution as an opportunity for growth and innovation. Panellists Sam Shadbolt, legal director UK & Ireland at AkzoNobel; Charlotte Digby, legal director at LEVC; Amrik Kandola, commercial mediator at Ask Mediation Ltd; and Dominic Hennessy, senior legal counsel at London Metal Exchange, emphasised proactive engagement, early legal involvement, and collaborative mediation, concluding that these strategies enhance business resilience and competitive advantage.

After a coffee break, two additional panels were held before lunch. Legal 500’s Ben Wheway and Legal Business reporter Holly McKechnie led an interactive session on what in-house lawyers expect from their external advisers and what their intentions are for the year ahead, drawing on the results of the Legal 500’s vast referee research database.

Another session, moderated by SSQ’s Laura Field, featured Taylor Wessing partner Siân Skelton; NatWest’s Lisa Ardley-Price; and Mandy Kaur, legal director at PizzaExpress. They discussed how GCs can enhance social mobility in the legal profession through outreach programmes and inclusive recruitment, calling for unity and collaboration to foster diversity and inclusion through mentorship and proactive support.

Following lunch, three panels were held. The first, hosted by Chris Bones, chair of Cilex, focused on in-house ethics with Jeremy Barton, partner and GC at KPMG; Dr Karen Nokes, lecturer in Law at UCL; Peter O’Keeffe, head of legal group and EMEA at Dr Martens; and Lara Oyesanya, GC at Zepz. They discussed ethical challenges and lawyer behaviour in corporate scandals such as the Post Office case.

Legal Business City reporter Elisha Juttla, then hosted a panel on crisis management with BA GC Andrew Fleming and Awaze GC Rupa Patel, who discussed how they had navigated crises such as Covid-19 and cyber incidents, highlighting the value of preparation and effective communication.

The final panel of the event was led by Simon Edwards, corporate and commercial partner at Trowers & Hamlins, and Natalie Hunt, assistant GC, group functions and employment at Johnson Matthey, alongside a trio of Gen Z legal professionals – Phoebe Clements and Jasmin Chiu of McArthurGlen Group and Lucy Gün of Coca-Cola, who contributed to an eye-opening discussion on the career choices of junior lawyers and what they truly value and expect from a modern employer.

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McDermott Will & Emery partner Ranajoy Basu, recently named Environmental/Sustainability: Private Practice Champion of the Year at the Legal 500 ESG Awards, discusses how he learned to leverage his structured finance expertise to support ESG causes in emerging economies

I am the seventh-generation lawyer in my family. From my father, I learnt a tremendous work ethic, yet he always remained fully committed to his family and friends. Likewise, my grandfather, no matter how busy, never failed to spend time with family. They both taught me to give 100% effort in my work and take pride in it, but also to make time for others and always keep the door open.

I had a watershed moment in 2006 where I realised that my expertise in securitisation and debt capital markets could be used towards development finance. The development finance sectors have historically been bank led, but very early on I was fortunate to work on a couple of transactions which demonstrated that you could tap the broader capital markets into development finance.

I was very fortunate that I worked on the first development impact bond called ‘Educate Girls’. This was for the education of children in a very remote part of Rajasthan in India, which was fascinating because the financing work was all cross-border. In many ways, that’s where some of my thinking started, but stemming from that, there came many opportunities.

I worked on the International Finance Facility for Education (IFED) transaction which remains one of the largest cross-border education financings for children around the world. I realised that this area of law was not only incredibly rewarding but also allowed me to apply my transactional structuring legal skills towards mobilising finance from all around the world to target critical issues like education and clean water. This is especially relevant now, as the ESG market has grown rapidly over the last decade, along with the need for interventions requiring financing, all against the backdrop of the UN’s 17 Sustainable Development Goals.

It’s very difficult to pick out a single deal but if I had to I would say the Global Islamic Fund for Refugees with the UNHCR. Given the tremendously complex issues around displaced persons around the world, it has a one-of-a-kind financial structure, which has got a number of innovations. That model is not just going to be replicated for other causes like education, sanitation and housing but also to directly impact millions of refugees around the world.

When I was really a junior, I thought I wrote the perfect email, but it had a big mistake. I wrote an email to about 20 people on our transaction but instead of saying ‘If you have any questions, please do not hesitate to reach out,’ I forgot the ‘hesitate’, so it read: ‘if you have any questions, please do not contact me’.

Another time I made a mistake by walking into a meeting room and having a 15-minute conversation about environmental finance with the wrong person. My clients were next door, but it’s funny because the person I was talking to was so interested in what I was discussing that she asked if we could meet up separately. It was hilarious.

If I wasn’t a lawyer, I’d probably choose a path focused on social change. I’ve always been drawn towards the bigger issues in this world, and I always find that if you follow your passion, everything else follows you in a way. I have some friends in the United Nations as well.

My management style is to encourage empowerment. Having worked with some amazing lawyers and leaders in the City, I’ve learnt that you don’t always need to monitor leaders, but you must empower them. As a practice group leader, it’s about creating opportunities for others to be able to have a platform to demonstrate their passions and ability to work hard. It’s very much about being collaborative and when you encourage that environment, there’s no shortage of ideas. Given my experience, of course I can deliberate on certain issues, but my message to everyone in leadership is to always follow a path of empowerment.

My team would describe me as approachable, friendly and extremely passionate about being part of the fabric of change. You don’t need to be a partner at a law firm to effect change. Sometimes I see juniors with drive and an instinct to want to be part of change, and I will always encourage that and work with people to inspire them to get out of their comfort zone. Complacency can very easily set in when you’re doing well at any level. My advice would be to never be complacent and rest back on great achievements but to try and push those boundaries even further. Hopefully for my part I can inspire people to do that.

Outside of work, I’ve got a tremendous passion for LEGO and strategic board games. I construct these huge Star Wars LEGO sets with my son. We don’t have any space in the house because of the size of these things! I’ve got two sons and I spend a lot of time with them. I’ve also got a library of board games in my house. Usually on a Sunday, no matter what we’re doing, there are friends and family at my house playing games. LB

elisha.juttla@legalease.co.uk

Go to the ESG Report contents.

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‘Flexible working is something I hope to see the legal profession increasingly support. I’m a single parent of two five-year-old girls. I couldn’t do this job unless I was more often than not taking them to school.’ Lisa O’Neill, Milbank

As part of our annual ESG report, management at top law firms give their views on ESG’s importance to both lawyers and clients

Dance it out

‘When I was in the middle of negotiating one of my most stressful deals, Beyoncé released a new song, so the only thing to do was download it and have a dance party for one in my study at 2am in the morning. It’s a stress management technique I would highly recommend!’
Nallini Puri, M&A partner, Cleary Gottlieb Steen & Hamilton

Hair today, gone tomorrow

‘There are a few of my male colleagues who I always know have just finished their deal when they turn up with a “signing/completion haircut”. While we do drop everything for the big push, that’s a good sign indicating they’ve probably had time to catch up again with everything else that’s fallen behind, including some proper sleep, and quality time with partner, family and friends, as well as life housekeeping.’
Gavin Davies, head of global M&A, Herbert Smith Freehills

School run

‘Flexible working is something I hope to see the legal profession increasingly support. I’m a single parent of two five-year-old girls. I couldn’t do this job unless I was more often than not taking them to school and putting them to bed at night. At this stage of my career, I’m lucky that I can manage this. For me, that’s enormously important.’
Lisa O’Neill, London corporate team co-head, Milbank

Laughter is the best medicine

‘Of course, laughter is one of the best ways of relieving stress. Sometimes you get an email setting out a ridiculously impossible deadline, but you can just roll your eyes and think, “Yeah, here we go again,” and have a laugh with the team. But if you’re there on your own with the pressure of your inbox constantly filling up with emails, it’s much harder to laugh by yourself and see the funny side of the quirks of our job.’
Penny Angell, UK managing partner, Hogan Lovells

Opportunity knocks

‘What I see among junior team members is a strong focus on wanting to combine interests in specific fields with their careers, and the ESG focus allows for that. It’s rare in the legal space to witness the development of a new area of law. These are massive opportunities for juniors to come in and experience the evolution of a legal space in real time.’
Jannis Bille, UK head of ESG, Herbert Smith Freehills

Working together

‘One thing I’m finding as a sustainability partner is that sharing our journey with clients is powerful. A collaborative approach with clients in this area has been effective. We’re working with them in the same arenas, sometimes moving ahead of them, sometimes behind, but always sharing. This has become a real area of collaboration for the business.’
Caroline May, ESG co-lead, Norton Rose Fulbright

Don’t forget the S and G of ESG

‘There’s a risk at times of overemphasising climate or environmental aspects to the detriment of understanding that these are all interrelated issues. The social risks and opportunities related to corporate governance and corporate activity are intrinsically linked to environmental issues – one can’t address one without the other.’
Michael Watson, head of climate and sustainability advisory, Pinsent Masons

Remember the essentials

‘It’s not just a “nice to have”. ESG is essential to doing business now.’
Alexandra Holsgrove-Jones, partner, knowledge – ESG, TLT

Empathetic leadership

‘We need a compassionate form of leadership. We are all increasingly global, and a good understanding of multiculturalism is crucial. It’s not just “this is how we do things in London; therefore, this is how we will do it everywhere else”. We need to understand our people, our clients, and the environments and cultures in which they operate.’
Farmida Bi, chair, Europe, Middle East and Asia, Norton Rose Fulbright

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What is the current state of Irish legislation on ESG?

Environmental, social and governance considerations have always been important to our clients but in recent years conversations about ESG matters have risen to the top of many organisations’ agendas, especially following the pandemic.

At Arthur Cox, we have seen demand for ESG-related advice increase over recent years and we expect that trend to continue as ESG considerations are pondered by governments, regulators, companies, investors and wider society.

The Irish legislative landscape on ESG matters is made up of domestic and EU measures (all of which exist in the context of global initiatives and discussions).

ESG touches upon multiple policy areas, such as climate action, biodiversity, energy, water, financial services, commercial enterprise, and transport. This means that legislation on ESG covers a broad range of topics and has an impact on multiple stakeholders.

When we talk about ESG, many of the legislative measures over the past decade have focused on the E of ESG, ie environmental goals (particularly those related to climate), but it is important to remember that there have also been significant legislative and policy initiatives connected to the S and the G.

Irish domestic initiatives over recent years are many and varied. They include the publication of Ireland’s first statutory National Adaptation Framework in 2018, the passing of the Climate Action and Low Carbon Development (Amendment) Act in 2021, committing Ireland to specific greenhouse gas emission reduction targets by 2030 and 2050, the Circular Economy and Miscellaneous Provisions Act in 2022 (supporting Ireland’s transition to a circular economy) and the Work Life Balance and Miscellaneous Provisions Act in 2023 (setting new ‘S’ rules for Irish workers).

At an EU level, measures such as the European Commission’s 2018 Action Plan on Financing Sustainable Growth, 2019 Green Deal and 2021 Sustainable Finance Strategy have led to a proliferation of European legislative measures, some of which are directly effective in Ireland with others being transposed into Irish law.

Are there any recent or upcoming changes to Irish ESG legislation that our readers should be aware of?

There are a number of measures that Irish businesses should be aware of and the key one to mention is the Corporate Sustainability Reporting Directive (CSRD).

Irish legislation transposing the Corporate Sustainability Reporting Directive (CSRD) is expected to be published ahead of the 6 July 2024 deadline. Companies within scope of the first phase will be preparing to report in 2025 on FY 2024.

We recognise that ESG considerations are impacting all of our clients across sectors not just through law and regulation but through other potential ESG-related exposures.

What legal obligations do Irish companies have in terms of ESG reporting?

Many of the legal obligations concerning ESG in Ireland stem from EU legislation. The focus of EU ESG measures in recent years has been on disclosure and reporting (as opposed to mandating specific actions).

The measures include those set out in:

• the Non-Financial Reporting Directive (2014/95/EU)
• the Corporate Sustainability Reporting Directive (EU) 2022/2464
• the Sustainable Finance Disclosures Regulation (EU) 2019/2088
• the Taxonomy Regulation (EU) 2020/852
• the Capital Requirements Regulation (EU) No 575/2013
• the Low Carbon Benchmarks Regulation (EU) 2019/2089
• the Climate Law Regulation (EU) 2021/1119
• the Gender Balance on Corporate Boards Directive (EU) 2022/2381

How does Irish law enforce ESG disclosure by companies?

Enforcement covering matters that are now labelled ESG is not new. Up to now, Irish law has overseen ESG disclosures under general rules of company law, eg, through examining company reports for material misstatements. Given the new and upcoming ESG-specific disclosure requirements, we expect enforcement to become increasingly robust with companies’ sustainability information being scrutinised by various stakeholders including regulators, lenders, insurance companies, shareholders and the general public.

The reach of ESG regulation is very broad and the regulatory sanctions will vary depending on the particular regulator engaged by the event that triggers an investigation. The regulatory and reputational implications of investigations are likely to be particularly significant if greenwashing allegations emerge.

It is important to remember that enforcement action by regulators is not the only means by which company disclosure will be scrutinised and challenged and we expect a rise in actions through litigation.

What are the penalties for non-compliance with ESG regulations in Ireland?

Regulatory sanctions will depend on the nature of the specific regime engaged. They can include directions, cautions, reprimands, fines, suspensions or revocations of authorisations.

Given the number of different sources of ESG regulations in Ireland, it may be most helpful to give an illustrative example. Taking the CSRD as that example, the CSRD will require companies to report sustainability information in compliance with new reporting standards. Failure to comply with these standards can result in substantial fines, eg, financial penalties of up to €50,000 and administrative fines of up to 2% of a company’s annual average revenue if it exceeds €400m.

Outside formal, financial penalties, it is also important for companies to consider the reputational risks associated with getting ESG disclosures wrong.

How does Irish ESG legislation address social issues such as employment rights and diversity?

Irish ESG legislation has been increasingly attentive to social issues, including employment rights and diversity, which underscores a broader commitment to equality, diversity and inclusion issues.

The introduction of the Gender Pay Gap Information Act in 2021 marked a significant step towards transparency in the workplace, requiring organisations with more than 250 employees to report gender pay gap metrics. From 2024, companies with 150 employees or more will be required to submit gender pay gap reports, and from 2025 this will be extended to companies with 50 employees or more.

How does Irish legislation ensure the environmental aspect of ESG, specifically in terms of sustainability and climate change?

Irish legislation has taken significant steps to ensure the environmental aspect of ESG, particularly focusing on sustainability and climate change.

The Climate Action and Low Carbon Development (Amendment) Act, signed into law in 2021, commits Ireland to a legally binding path to net-zero emissions by 2050 and a 51% reduction in emissions by 2030 from a 2018 baseline.

This act is a cornerstone in Ireland’s framework to meet its international and EU climate commitments, aiming to transform the economy towards a greener future.

What is Arthur Cox’s approach to ESG issues in its legal practice?

At Arthur Cox, we recognise that ESG considerations are impacting all of our clients across sectors not just through regulation but through impacts on their business proposition.

Our ESG group works with our clients to identify and integrate ESG priorities at all levels of their businesses. We advise clients on areas such as energy transition, climate action, sustainable finance and green bonds, ESG disclosures and sustainability reporting, sustainable real estate investment and development and green leases.

What sets us apart from other firms is the breadth and cutting-edge nature of our ESG practice. Our ESG group is at the forefront of the market, providing clients with advice across the entire ESG space.

We have assembled a cross-disciplinary team of experts who bring a wealth of knowledge and experience across sectors to work with our clients to meet their ESG-related goals and obligations.

Our approach is collaborative and client-focused. We work closely with clients to understand their unique goals and challenges, providing tailored solutions that reflect the latest legal updates and industry insights.

What measures has your firm taken to improve its own ESG performance?

Sustainability for us involves a commitment to robust governance, policies, and practices. That commitment includes a relentless focus on diversity and inclusion, respect for human rights, responsible procurement and environmental sustainability. The integration of each of these elements is a key part of the decision making for our business.

Our ESG strategies are overseen by our Sustainable Business Committee, which manages our Sustainable Business Programme. At the core of this programme is the annual publication of our Sustainable Business Impact Report. Launched in 2021, this report is a comprehensive overview of our initiatives and accomplishments across four essential dimensions: community, workplace, marketplace, and environment. By aligning with the UN Sustainable Development Goals, we aim to show our commitment to global sustainability standards.

We aim to play an active role in contributing to positive change while minimising our environmental impact through a programme of monitoring and continuous improvement.

What are the biggest ESG challenges your firm currently faces, and how are you addressing them?

As a firm, we have set ambitious targets in relation to reducing our Scope 1, 2 and 3 emissions. Over the past 12 months, we have continued to work with our people and external stakeholders to assist us in the delivery of the key measures required to achieve our carbon reduction goals.

Our work in this area is continuing and we are very aware that we need to continue to work with our people to reduce our carbon footprint as an organisation. To address this, we are working hard to explore alternatives so that we can provide more sustainable options through an updated travel policy, online meetings, events and other operations.

How does the firm assist clients in integrating ESG factors into their business strategies?

We assist clients in navigating reporting obligations and advise boards on strategic planning, risk management and internal controls to support disclosure in relation to their business operations and value chains.

Our ESG group advises on disclosure and sustainability reporting obligations in relation to climate, diversity and other aspects of ESG in compliance with local and international legislation and voluntary frameworks, including the CSRD, the Taxonomy Regulation and Task Force on Climate-related Financial Disclosures.

We also advise companies on all aspects of their governance arrangements. Board governance and oversight is essential in developing and delivering effective ESG strategy, managing risks including activism and litigation, supporting robust disclosure and maintaining stakeholder engagement.

We provide regular ‘horizon scanning’ insights to legal teams and company boards regarding ESG-related developments and advise boards on topical issues including board diversity, executive remuneration, directors’ duties and the implications of new legislation such as the proposed Corporate Sustainability Due Diligence Directive (CSDDD).

Can you share some examples of how Arthur Cox has helped clients navigate complex ESG issues?

Our ESG team offers advice on a multitude of complex ESG issues, such as:

Environmental: Under the environmental pillar we advise on energy system transition, energy efficiency and demand side response, resource management and the circular economy, carbon sequestration and emissions reduction, sustainable finance, climate-related plans, disclosures and activism and environmental due diligence.

Social: On the social side, we have extensive experience advising on the social impacts of organisations on internal and external stakeholders. We advise on equality and discrimination matters, environment, health and safety issues, community investment and capacity building as well as human rights and the rule of law.

Governance: Good governance is a core aspect of ESG, and our team regularly advises clients on all aspects of their governance arrangements, including areas such as strategic oversight, risk management, shareholder engagement and reporting and transparency.

The post Q&A: Sarah Thompson, Arthur Cox appeared first on Legal Business.

Environmental, social and governance (ESG) has evolved at a rapid pace in recent years. We’ve seen a meteoric rise in stakeholder engagement and interest well beyond the investment community where the concept initially started to gain mainstream attention. This really accelerated in 2020 around the Covid pandemic when the importance of pressing global issues like the combined climate and biodiversity crises were re-evaluated. This was followed by well documented labour and sourcing issues as global economies opened back up after lockdowns. We are now entering a phase where there is a clear shift in progress, away from voluntary standards and best practice ESG frameworks, towards mandatory reporting and stricter disclosure requirements. These can be linked to specific issues such as physical and transition climate risks, but also to the more general ESG issues, for example supply chain and the associated issues of modern slavery and forced labour.

As a consequence, there is now more ESG data than ever before, and an ever-growing demand for good quality, accurate information, not just on or for an individual entity, but data and insights on its wider value chain.

ESG data has therefore become increasingly important for organisations, none more so than for law firms who have practice areas and touchpoints across many sectors and rely on up-to-date, precise information to fulfil their responsibilities to clients. Law firms with corporate practices will need to advise their clients on ESG risks and opportunities associated with ESG due diligence, emerging or recently introduced regulations such as Corporate Sustainability Reporting Directive (CSRD) or Corporate Sustainability Due Diligence Directive (CSDDD) in the EU.

One of the major developments that has occurred in the last 12 months has been the move via the International Financial Reporting Standards (IFRS) to consolidate a number of ESG standards such as the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TCFD) into a single standard. This led to the development and release of International Sustainability Standards Board (ISSB) standards. Long heralded as the start of the global baseline for ESG standards, the objective was to streamline and simplify ESG, and reduce the alphabet soup of standards across multiple jurisdictions. As this regime beds in, challenges remain to have such a unified set of ESG standards that should bring much needed clarity and precision into ESG terminology.

The challenges and opportunities for law firms

This historic lack of standardisation was in part responsible for the patchwork of regulatory and disclosure requirements. This in turn created uncertainty about the quality and reliability of data which then led to greenwashing by many businesses, with the consequent well publicised greenwashing litigation and investigations by the Competition and Markets Authority (CMA).

These uncertainties create very real challenges when advising private equity firms on ESG diligence. The complexities include the jurisdictions of your clients, the target companies being acquired, their industry, size, structure and whether they are private or listed entities. To navigate this minefield, there is a clear need for a robust standardised and repeatable risk screening approach to enable key global ESG issues to be framed during the diligence phase.

‘While the current ESG landscape does present major challenges, it also presents a unique opportunity for law firms to position themselves as leaders.’ Tom Venables, Landmark

But while the current ESG landscape does present major challenges, it also presents a unique opportunity for law firms to position themselves as leaders in this fast-emerging space and build out their own services to support the needs of their clients backed by the best data and insights. Many firms have made great strides in developing dedicated ESG practice areas and, with surveys over the past couple of years indicating, many more have plans to do so in the future. With the development of these teams comes the need for robust and reliable data that can be incorporated into a firm’s ESG processes and systems.

The role of technology

Technology is already playing a critical role in the utilisation of ESG data in a number of contexts, with many firms integrating software solutions or systems to enhance their existing processes. Notable advancements such as the prerequisite for CSRD reporting to have digital tags and for the reports to be machine readable so submissions can be easily accessible within an EU-wide central database all point towards a future of abundant and accessible ESG information.

When considering ESG data for specific scenarios such as due diligence, technology provides a powerful tool to identify and draw out difficult to find information, whether that’s specific information hidden in company disclosures and annual reports, or interrogating regulatory databases to identify information on product recalls or data breaches.

‘There will be a fine line to tread for all organisations between the exponential increase in energy consumption needed to power the AI revolution, against the backdrop of the transition to a net zero world.’ Tom Venables, Landmark

The future of ESG data will undoubtedly revolve around generative AI models and machine learning combined with the oversight and input from expert consultants. We can anticipate the development of forward-looking projections that consider global changes around complex interrelated factors including political instability, climate change, biodiversity loss and systemic risks. Of course, there will be a fine line to tread for all organisations between the exponential increase in energy consumption needed to power the AI revolution, against the backdrop of the transition to a net zero world.

Introducing Risk Horizon ESG Screen Report

Landmark’s ESG risk screening tool Risk Horizon, and its managed service ESG Screen reports, have been supporting leading national and international law firms over the last four years. Risk Horizon has been used to provide analysis and insights to aid ESG diligence on PE advisory, corporate mergers and acquisitions, client and supplier screening, in addition to gap analysis on law firms’ own ESG credentials.

Data and partnerships

Landmark is an IFRS Sustainability Alliance Member and licensee for using SASB standards data and IP forming the underlying Risk Horizon framework for industry risk. Key Risk Horizon features include:

• Scope of topics covered by Risk Horizon are aligned with additional recognised global standards such as GRI, CDP and TCFD.
• Risk Horizon is also home to Anthesis Group and Landmark created datasets and business logic supplementing SASB framework data.
• Data is regularly reviewed and updated by our consultancy team
• Risk Horizon includes global datasets and indexes covering 50 risk topics from organisations such as Transparency International and International Trade Union Confederation
• Through our managed service reports, platform data is supplemented by consultant reviewed information from additional resources such as the Business and Human Rights Resource and a range of regulatory databases and digital media sites. This ensures potential compliance and reputational issues are sourced at the earliest stage possible.

Legal context

Risk Horizon’s ESG Screen report is an ideal first step when acting on behalf of a client for PE advisory work or M&A corporate transactions. The report is suitable as an early stage due diligence screening report that frames the key ESG issues that should be considered especially where information is limited for private companies. The following use-cases demonstrate the variety of contexts in which the report can be utilised, as well as how it can be focused into these areas:

Private equity/M&A

• Quick and efficient risk profile of potential target company
• Suitable for both public and private companies
• Focused ESG diligence questions
• Reduces costs incurred and time taken in diligence process

Capital markets/regulatory

• Identify ESG risk areas for disclosures
• Standardised approach with SASB standards aligning with company reporting frameworks
• Global tool covering 50 risk topics, 85 industries and thousands of data points

Client pitches and client screening

• Clear and concise layout to present ESG risks and opportunities
• Objective assessments that can form the basis for the client pitch and from which discussions can be based

As well as the above, the Risk Horizon ESG Screen report can also provide value when assessing any reputational ESG risks when looking to act for potential new clients.
Risk Horizon helps to make sure the right issues are being looked at based on the appropriate geographies and industries of a given company.

By requesting a Risk Horizon report from Landmark, you and your client will benefit from the combination of a world-class specialist ESG consultant, combined with the power of the Risk Horizon software and its global data points to complete the assessment.

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