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Why not having an ESG strategy is the riskiest strategy of all

Trees

Chief Executive Melissa Davis looks at the risks for law firms who haven’t yet ensured climate change and other key sustainability issues are at the heart of their strategy and planning.

As if we didn’t need any more warnings after COP26, the professional services sector got another wake-up call this week about how important the climate crisis and sustainability are in people’s and business’ priorities.

This time it came from law firm DWF, whose research showed that firms who have environmental, social and governance (ESG) policies perceived as ‘weak’ are already having problems attracting new people and new work.

According to the listed firm, two in five businesses are struggling to recruit because their ESG credentials are thought to be inadequate.

Add to that the second headline, that a perception of being weaker on ESG is causing 61% of businesses  to lose work, and it shows that this is now something that no firm can ignore any longer.

Make your position clear

To be honest, COP26 ended with a very mixed bag of messages. There was the PM trumpeting the deal signed in extra time as ‘game changing’ and sounding ‘the death knell for coal’.

A slightly different take to the campaigners outside, on media and on social media excoriating the deal and the world’s leaders as ‘weak’.

We even had Conservative MP and COP26 President Alok Sharma almost in tears as he announced a deal which had had to be watered down to get China and India to even sign it – moving from ‘phasing out’ coal power to ‘phasing down’.

In the end, it’ll be for the experts, the scientists and the politicians to extract action from the words but it leaves the rest of us, including law firms, with our own work to do on tackling the climate emergency.

Tactics before the strategy is a strategy – a risky one

Many businesses tried to use COP26 as an opportunity to get their name attached to the event and try to gain some positive coverage. 

Using tactics – and short-term ones at that – at a time when they’re likely to be drowned out by lots of noise are unlikely to make much difference. We’re not going to solve the climate crisis with a couple of press releases. Or a couple of posts on social media.

What law firms do need to do is to ensure climate change and other key sustainability issues are at the heart of their strategy and planning from now on, if they’re not already. The tactics (press releases, social media etc.) of how to get those messages out should only be implemented once the strategy is signed off. 

The latest research shows the importance of this. ESG is increasingly one of the first things potential recruits and potential referrers look for. If your credentials aren’t clear, or if they look like tokenism, then you’ll put people off.

And it’s only going to become more important. We all need to take action in our personal lives to meet the climate challenge. The reality is that all firms also have to do their bit – not just because it’s good for business but because it’s the right thing to do.

Walk the talk

ESG has been a key area of advice that we’ve been supporting clients with for some time. We have an in-house strategic team dedicated to ESG and one of our clients, impactvise, is the first AI-driven startup that provides performance insight, educational training and advisory services for ESG and sustainability to legal service providers. It has completed what we think is the largest ever study of law firm performance against a set of ESG measures adapted from the World Economic Forum metrics. Their findings, which will be published shortly, suggest law firms have some way to go.

Our advice to clients is always to ensure that what they are doing and what they say they’re doing has to stand up to close scrutiny. Basically, if you don’t think it will, you’re not doing enough.

Put simply, doing just enough isn’t a real option any more. The net zero challenge we all face will only be achieved by genuine reductions in carbon emissions, not by managing or maintaining.

Scrutiny will only increase, starting with the biggest firms of course, but it will reach all business, including the professional services sectors, which is seen by many as lagging behind.

If you don’t know what the Board’s ESG strategy and targets are, then you should ask. If you’re on the Board and you don’t know, then you really have a problem. And not much time to sort it.

Green or greenwash

I’ve seen many companies trumpeting their latest green credentials but the challenge with that is two-fold – are they genuine and will they be achieved? Will anyone really check back in 2030 and 2035 to see if you have hit the target you said you will?

Well, the answer to that has increasingly been ‘yes’. Even more so now with the news that the UN is setting up a ‘green washing’ watchdog to name and shame companies that fail to deliver on net zero commitments.

Which means any quick-fire, short-term press releases which some firms may have issued a month ago to tap into the COP26 news agenda may yet come back to bite them in the months and years to come.

There’s no time to waste but equally, there’s no gain in rushing out something just because it sounds good. If you have a sustainability strategy, then you need to be comfortable that it has clear plans for cutting emissions and that you are on a net zero trajectory.

If you don’t have a strategy for emissions reductions and sustainability, then that needs to be your focus. Identifying the part you can play in cutting carbon and tackling the climate crisis.

Having a clear position on ESG is vital for reputation, for bid documents and pitches, and for employer brand. It will only increase in importance.

But above all, it’s our duty. All of us have a part to play. And there’s no time to delay. 

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