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June’s virtual session for senior in-house counsel saw lawyers from Lawyers for Net Zero, Standard Chartered Bank, Arco and Centrica plc join ½Û×ÓÊÓƵ, Flex Legal and Radius Law.

It was also the official launch of a report from ½Û×ÓÊÓƵ and Lawyers for Net Zero, Implementing the E of ESG: why in-house lawyers are instrumental, based on conversations with influential GCs and in-house counsel, conducted independently by Spinnaker Research.

Adam Woodhall, founder and CEO of Lawyers for Net Zero, delivered the session and introduced our panellist General Counsel who were all involved in the report: Andrew Dixon-Smith, Head, Legal, Client Coverage at Standard Chartered Bank; Neil Dodds, General Counsel and Company Secretary for Arco and Nichola Westlake, Associate General Counsel for Commercial Legal Services at Centrica plc.

They discussed the role in-house lawyers can have in driving ESG agenda, how legal teams can show their value to their businesses’ ESG agenda and their top tips on getting involved in your businesses’ net zero journey.

Before opening the panel, Adam asked all the session participants to write what first came to mind when thinking of in-house lawyers and ESG:

Adam began the panel by highlighting the need for in-house counsel to take rapid action to drive climate transitions. He explained that the most effective way to do this is by becoming climate and ESG leaders. He defined leadership as ‘a process of influence which maximises the efforts of others towards the achievement of a goal’ and offered that as such, all in-house lawyers are leaders.

Adam gave two reasons why in-house counsel would want to be climate and ESG leaders before turning to the GCs to ask them the same question:

1. The existential threat to society and business regarding the climate and ecological crises
2. The business case regarding the ‘Three Rs’ of ESG – Risk, Reputation and the Right thing (to do)

Why would in-house lawyers take leadership of climate and ESG?

Neil Dodds, General Counsel and Company Secretary for Arco began answering this question by asking ‘why not’? From a personal standpoint, most legal counsel will have a personal drive to want to do something about the current climate issues. From a business standpoint, in-house lawyers are part of a business so it’s difficult not to recognise that ESG is now central to all businesses’ thinking in both setting business strategy and risks.

Andrew explained that in-house lawyers should take leadership of climate and ESG because the tremendous value that in-house lawyers can bring to a company’s ESG journey, particularly to aspects of strategy, governance and execution is not always understood. For this value to be understood and realised, in-house lawyers need to get to the table and apply a legal lens to the company’s strategy.

Nicola then pointed out that in-house legal teams are also perfectly positioned to drive ESG agendas forward by holding the mirror up and challenging ESG related issues.

What has been useful/effective in driving ESG agenda?

The panellists provided 3 main elements that they have found effective in driving ESG agenda:

1. Speaking up – Nicola expressed that speaking up and letting colleagues know she was interested and wanted to help had been effective. Doing this allows you to join the conversation surrounding ESG and drives conversations of shared experiences. The more people are aware of those in the business who are interested and in a position to help, the more steps are able to be made.
2. Education – All lawyers have to research certain queries and ESG should be no different. Researching the topic and having a wider perspective on the topic is useful in helping you get involved be it incoming legislation or horizon watching. To learn more on related ESG topics you can use ³¢±ð³æ¾±²õ±Ê³§³¢â€™s Sustainable Business Toolkit.
3. Collaboration – Both Neil and Andrew found that interacting across stakeholders of the business, focusing on the strategy with a similar ESG interest and asking the hard, uncomfortable questions around why certain things aren’t and shouldn’t be done has been fundamental. Wider collaboration between in-house lawyers and other teams working together on a collaborative strategy makes the legal role more effective and allows you to bring the business strategy to the legal issues.

What have you personally found where you’ve used action on the ‘E’ of ESG to demonstrate the value of the legal team to the wider business?

As I’m sure you would agree, legal teams can and so should demonstrate their value. Important areas such as origination and governance need lawyers involved to ensure credibility in an organisation’s ESG strategy. When posed with this question, Andrew set out ‘3 buckets of key contributions’ that in-house lawyers should be aware of:

1. Strategy, Communications and Disclosure – In-house lawyers should lean in, advise and help shape aspects of strategy. Legal needs to be centrally positioned in all aspects of the business strategy in which ESG plays a role. This is particularly important in ESG publications and advertisements to protect businesses from greenwashing and in helping credible and legitimate achievement of net zero.
2. Risk and Governance – In-house lawyers can help identify rules and policies. In a financial space for example, this could be knowing what green bonds, green lines and sustainability links are and their structuring. Adapting a business strategy in response to increases in hard law and the evolving legislative environment in the ESG space is fundamental and shows the value of the legal team.
3. Transactional and Operational Process Oversight and Behavioural Change – There are lots of evolving regulations, taxonomies, disclosure frameworks etc. linked to ESG and consequently a large range of activities lawyers can get involved in. Andrew suggested that once you have started your involvement, the value will be recognised.

In smaller companies, in-house lawyers can become part of the key conscience of the company. Neil pointed out that a big part of ESG is change. Decisions to make such changes can be uncomfortable and in-house lawyers can give legal rationales for these decisions and be trusted advisors for the business.

Having a top-down agenda is an effective tool in allowing legal teams to hold the mirror up and challenge ESG decisions as in-house lawyers are often listened to in a way that other functions aren’t. Nicola gave the example of supply chain contracts as an immediate way for legal to take action where parties can be agree to be held accountable in an ESG context.

Top Tips for getting involved in the ESG agenda

Lean in and nudge – For Andrew, in-house lawyers need to ‘lean in’ and get to the table for discussions on strategy, risks and opportunities. Once in, you can encourage change and focus on ESG and the net zero journey. Related legal involvement will then follow from the initial leaning in and nudging.

Be Brave – Neil’s top tip is having courage in your convictions. If the decisions you are taking aren’t uncomfortable then it is likely that you are not leading, you are waiting for others to lead.

Start Somewhere – As Nicola pointed out, ESG agenda can be overwhelming, and it is a long race. She recommended to start by taking small steps as they will all lead to a bigger one.

³¢±ð³æ¾±²õ±Ê³§³¢â€™s Sustainable Business Toolkit is a great start for in-house counsel to learn about sustainable businesses issues in one central place. The toolkit includes advice and information on various practice areas such as competition, environment and finance with over 100 practice notes and checklists at your disposal. Using this content, practitioners will be able to advise businesses on what sustainability means for their undertaking, help them to identify what they should be doing and why it is important, and explain how they can maximise opportunities and minimise risks.

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