Three letters seem to be everywhere you look these days: ESG. Law firm after law firm seems to be offering environmental, social and governance advice and even new practice teams to corporates on a daily basis. Press releases talk about helping clients ‘navigate the regulatory requirements’ and ‘lead the way’. The fastest land animal is arguably not the cheetah, but instead a lawyer jumping on the ESG bandwagon.
Excuse me for sounding a little jaded. It’s just that we’ve been here before with three little letters: CSR. At first that was all about good intentions, law firms demonstrating their commitment to corporate social responsibility. But it soon descended into a cynical PR exercise, with law firms that did a bit of pro bono, an occasional charity bake-off and remembered to turn their lights off once in a while touting themselves as the epitome of CSR best practice. This was before the global financial crisis came and took many of those good intentions away.
Now we’re back to supposedly enlightened times, where good corporate governance, saving the planet, being inclusive and caring about the mental wellbeing of those who work with us and for us are more important than the culture of greed is good. Corporates are putting their best foot forward. Vodafone has unveiled a new panel, selecting eight firms based on a commitment to shared diversity and ESG best practice (see Spring 2021 Significant Matters). In January, Coca-Cola GC (and soon to strategic consultant to the company’s chairman and chief executive) Bradley Gayton, set diversity targets for its US advisers in a letter in which it warned non-compliance would result in a 30% fee reduction and would be a key factor in deciding on new panel firms in just over year’s time. Both corporates are looking for a real commitment and results, not just lip service and good intentions.
And that is where things need to be different this time around. There is a clear movement towards social accountability from individuals and corporates but now they have to prove it. No more virtue signalling. Clients need to hold their legal advisers to account on this and make sure their actions and culture marry with their own. The onus is on them to go beyond the PR of ESG advice and really hold firms to account on their own governance, commitment to diversity and protecting the planet.
By the same token, law firms themselves need to show a little more backbone if they are to hold themselves out to be pioneers of the ESG movement and this means saying no to clients, especially those that conflict with their own ESG principles. Clients need to be prepared to accept that push back, unless ESG is not a concern to them. The days of law firms relying on the argument that they were just following instructions when challenged on questionable behaviour on behalf of their clients are over.
This why we want to see results before we praise law firms for their grandiose ESG pronouncements. We’re no longer interested in puffery and good intentions. Clients want results and we will be watching. It’s time to walk the talk.