Street Law will be publishing a series of blogs, reflecting the interests of its team members in their chosen subject. The first is on the increasing importance of sustainability and ESG initiatives and is written by Sophie Dowse, Street Law Legal Researcher.
The increasing importance of sustainability and ESG initiatives
Environmental, Social and Governance (ESG) initiatives have become increasingly important. The pandemic and protests surrounding the Black Lives Matter movement has highlighted racial injustice, social inequality and health and environmental issues. Therefore, companies and law firms are beginning to shift their focus to ESG initiatives.
Focusing on ESG programs can help companies limit the impact of COVID-19 and devise innovative solutions to speed recovery. For example, investing in the work force can allow employees flexible working arrangements and paid sick leave which can increase motivation and mobilise talent in new ways. Companies such as distilleries have redirected their operations to produce hand sanitiser in response to its demand and necessity in the pandemic to benefit society.
It has also been shown that companies who invest in sustainability may have better economic performance. One way this has been increasing is through the issuing of sustainability bonds. For example, Pfizer issued a $1.25 billion sustainability bond to support increased patient access to vaccines whilst limiting client impact from reduction in waste in the manufacturing process.
By companies adding value to society and aiding towards the solution of the crisis, they are likely to attract trust in their leadership which is increasingly important to investors, customers and future employees.
Focusing on ESG initiatives can create more legal work. Law firms therefore may have more challenges in terms of compliance with ESG initiatives, as well as advising clients on proper conduct and governance as ESG objectives become more prevalent, by making them aware of any risks or rewards and the proper legal procedures to follow.
What is one company’s ESG program you have been impressed with?