Article

What In-House Lawyers need to know about ESG

30 January 2025

A group discussing ESG

What is ESG – in a nutshell?

ESG stands for Environmental, Social and Governance and is a framework used to measure a business’ impact on society and the environment, whilst also evaluating how transparent and accountable a business is in relation to ESG matters.

This framework assesses the sustainability and ethical impact of a company or investment and is an important factor that investors will take into account when investing in a business. Research also shows that good ESG practices will not only help to attract and retain staff, (particularly younger employees who belong to a generation that seems to consider, and care, more about the environment and sustainability) but will also appeal to customers and suppliers of a business.

Why is ESG relevant to in-house lawyers?

In-house lawyers are trusted advisors and business partners to the businesses they work for and their role enables them to have clear oversight of what’s happening across the business as a whole. In-house lawyers recognise that ESG is an important component for business growth and that they can have a direct impact on the business’ success and bottom line and add real value by understanding what ESG is and how it can benefit the organisation.

What to consider re ESG

It is important for in-house lawyers to consider ESG when envisioning progression of long-term, sustainable goals and values of the business. Below are some key, practical points to consider.

  • Collaborate and Communicate – work with colleagues to understand the business’ priorities and objectives on ESG; in-house lawyers are in the unique position of having access to all areas of the business; use this to communicate the business’ ESG strategy.
  • Comply – ensure that the business is complying with all mandatory laws and regulations (e.g. employment law, data use and security, energy regulatory law).
  • Educate and Empower – educate the Board and senior leadership team on why ESG is so important (a cost-benefit analysis may be useful) and empower stakeholders to use that newly-acquired knowledge to create a strategy to move forward.
  • Identify and Influence – an in-house lawyer’s legal and commercial knowledge can be used to identify the law and practical steps needed to address ESG issues and to influence key stakeholders in the business.
  • Manage and Mediate – the in-house lawyer’s role in ESG will involve managing expectations about what is both necessary and achievable; stakeholders will no doubt have different views on the importance of ESG and the lawyer’s skills in mediation to address any differences will be put to good use.
  • Prioritise and Protect – it will be important to advise the business to prioritise ESG issues (the strategy will not be achieved overnight); whilst working through the priorities, it is important to ensure that the business is protected against claims for non-compliance of mandatory law and regulation.
  • Lead and Think Positively – as someone with a bird’s eye view of the business, the in-house lawyer can take a lead on strategy for ESG and can assist in addressing the issues in a positive way (the business will not only be compliant with the law but will also benefit in other ways (e.g. financially and in staff recruitment and retention, as referred to above).

In-house teams may wish to consider external support to fully implement ESG, ensuring that the law is complied with, and that the legal team is assisting the business and adding value, by creating innovative ideas for the business to achieve its goals within a complex landscape.

Our HCR Law experts can assist in-house legal teams to progress their ESG matters, so please contact Tracy Lake, Partner, Commercial Team if you would like to know more.

Related articles

View All