ESG

[Lauren]

How does ESG impact magic circle firms as a business?

Are they likely to be more wary of who they take on as clients given reputational issues e.g boohoo?

Also would they aim to integrate ESG expertise across team?

 

[Naomi U]

Hi Lauren

I'm far from an expert on this however my approach would be that ultimately law firms are businesses and service providers. Therefore, the focus here would be on clients and how firms try to cater to clients. So I think my focus would be on the current trends and issues that are affecting clients of the various firms and then to consider the impact of ESG in catering to these trends and issues.

I think taking this approach will help streamline your answer as the impact is likely to vary amongst clients and industries and thus amongst firms.

Hope this helps!

 

[Alice G]

Hi @Lauren,

I agree with what @Naomi U says here - just to add, here are my thoughts too:

Clients are driven by consumers and the trends seen in their target markets. A lot of businesses now are particularly conscious of ESG because fundamentally consumerism is in a time of flux. With the younger generation, we are much more mindful of the climate crisis and our impact on the world around us. Hence, when Pretty Little Thing were selling clothes at extraordinarily low prices, instead of much of the consumer market seeing that as a great thing for consumers there was widespread outrage because we have an awareness that to sell clothes so cheaply, there must be fundamental rights issues somewhere in the supply chain with workers being paid incredibly low wages and sometimes cases of exploitation. Hence, clients are needing to take stock and alter their business practices because without consumers, they are essentially doomed. The potential for backlash and repetutational damage is therefore much more of a consideration this day in age and businesses are constantly having to tread the line between making profit -to grow and keep investors happy - and ensuring moral practices.

In terms of law firms then, lawyers will be advising clients on how they can best do this within various jurisdictions and with regard to the different regulatory bodies and laws. But, for me, I think the key thing is law firms themselves have to have regard to ESG - if clients are altering their business practices then they would ideally like to see the same of their lawyers. It really boils down to values and the need for clients and their lawyers to be aligned on matters like this - it is why many law firms now have committed ESG principles and dedicate time to think of their strategy in this area.

 

[Daniel Boden]

Hi @Lauren,

I agree with what @Naomi U says here - just to add, here are my thoughts too:

Clients are driven by consumers and the trends seen in their target markets. A lot of businesses now are particularly conscious of ESG because fundamentally consumerism is in a time of flux. With the younger generation, we are much more mindful of the climate crisis and our impact on the world around us. Hence, when Pretty Little Thing were selling clothes at extraordinarily low prices, instead of much of the consumer market seeing that as a great thing for consumers there was widespread outrage because we have an awareness that to sell clothes so cheaply, there must be fundamental rights issues somewhere in the supply chain with workers being paid incredibly low wages and sometimes cases of exploitation. Hence, clients are needing to take stock and alter their business practices because without consumers, they are essentially doomed. The potential for backlash and repetutational damage is therefore much more of a consideration this day in age and businesses are constantly having to tread the line between making profit -to grow and keep investors happy - and ensuring moral practices.

In terms of law firms then, lawyers will be advising clients on how they can best do this within various jurisdictions and with regard to the different regulatory bodies and laws. But, for me, I think the key thing is law firms themselves have to have regard to ESG - if clients are altering their business practices then they would ideally like to see the same of their lawyers. It really boils down to values and the need for clients and their lawyers to be aligned on matters like this - it is why many law firms now have committed ESG principles and dedicate time to think of their strategy in this area.

Just to add to these great points, a lot of firms are now creating ESG practice groups - I know that Gibson Dunn has for instance

 

[rjlav]

Some great replies in this thread already. I'm making sure to focus on the potential impact of ESG matters on clients (and the commercial world in general) and how the legal landscape is about to change in the coming years as a result of the climate crisis and other conflicts between business, the environment and society.

This is a good video for more on this, I think: