Special Report

The Barometer

A look at what we're watching in the changing legal landscape, and what our reporters and editors will be discussing at Legalweek(year) 2021

X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Welcome to our Law.com Barometer newsletter, powered by the ALM Global Newsroom in advance of Legalweek 2021. Each week this newsletter will bring you the trends, disruptions and shifts our reporters and editors are tracking through coverage spanning every beat and region across the ALM Global Newsroom. The micro-topic coverage will help you monitor the changing landscape of the legal industry and prepare you to participate in the events taking place at the year-long #Legalweek21.

The Shift: GC Focus on Social Responsibility Creates Opportunity for Firms

To add to the list of priorities of chief in-house lawyers, general counsel and CLOs are also leading the charge at their companies when it comes to environmental, social and governance (ESG) initiatives, such as diversity and inclusion and corporate social responsibility. And in turn, they are also demanding their outside counsel be part of this effort.

This shift from in-house legal leaders playing a background approval role in corporate messaging to being an integral outspoken advocate in the press and on social media about what their company is implementing on corporate social responsibility issues, just highlights further their evolving role as a company leader. In fact, their involvement in cross-functional initiatives within the organization enables them to take on this opportunity to drive positive change. And by doing so, it is also an opportunity to show their increasing value to the organization.

The Conversation

“Identifying what part of the organization should lead efforts is the first step to tracking metrics,” said Laura Ann Smith, assistant GC at Tailored Brands Inc. And lately, there has been a trend of putting the general counsel or another legal department head in charge of those efforts. Smith explained those leading ESG initiatives should examine their peers’ actions and query stakeholders on their expectations of the company surrounding ESG. “We started by putting together a three-year plan which was really a road map of what we needed to do to create the sustainability efforts and reporting milestones that we aspired to implement,” Smith explained.

Touting ESG efforts will also help keep employees interested in their work, Eric Gunning, deputy chief legal officer at Molson Coors Beverage Co. in Chicago, said. After his company conducted internal employee surveys, Gunning said approximately 90% of the employees viewed ESG as a top priority. “Employees want to be proud of where they work. They want to join companies that are mission-driven and have a goal of giving back,” Gunning said. “We know that in order to drive the long-term success of organizations we need to be looking at things like diversity and inclusion, climate change and governance.”

Carol Ward, corporate governance leader at Corporate Governance Partners Inc. explained consumers are also becoming more aware of how companies are responding to social justice and climate change. In 2019, she said, 47% of internet users worldwide stopped using certain products because a company violated their personal values. “Value and ease of purchase are still the main drivers of consumer purchase decisions,” Ward said. “But sustainability and social responsibility is really becoming a much bigger factor.”

The Significance

Companies and their leaders are being held to task on their social responsibility pledges. Consumers are observing companies to see if they are really walking the walk, and if they aren’t, it can lead to real reputational risk issues affecting the bottom line. GCs also hold the power to demand change in their outside counsel teams by requiring firms to have a demonstrable and meaningful commitment to their social responsibility issues such as diversity, equity and inclusion. To this end, in-house leaders making hiring decisions are looking closer at the hiring practices of their firms. How do they staff cases? Who gets the origination credit? A law firm’s actions speak loudly and tell the client more about its commitment to these issues than a nicely drafted mission statement.

Investors are also showing interest in the corporate impact on the environment. “There is this belief that companies have adopted that they perform better around ESG metrics,” said Carlos Brown, general counsel and chief compliance officer of Dominion Energy. And the data backs that up. According to Ethisphere’s 2020 World’s Most Ethical Companies data set, 74% of companies look at environmental efforts during the due diligence process for mergers and acquisitions. In addition, the Harvard Business Review recently found that a majority of the 70 executives at global institutional investment firms have corporate sustainability at the top of mind. A focus on corporate sustainability enables general counsel to leverage their role as trusted advisors in proactively driving positive change.

The convergence of financial, environmental, social and ethical issues to achieve long-term value is really driving engagement in corporate sustainability. And as Claudia Toussaint, general counsel and chief sustainability officer of Xylem Inc. said, “The role of the chief sustainability officer is a natural accompaniment to the evolution of the general counsel.”

The Information

Want to know more? Here’s what we’ve discovered in the ALM Global Newsroom:

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

Heather Nevitt

Heather D. Nevitt is the Editor-in-Chief of Corporate Counsel, Inside Counsel and Global Leaders in Law.

More from this author

 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.