ESG - 5 key challenges facing General Counsel

TLT recently hosted a roundtable with General Counsel from the Innovative GC network, to discuss key ESG (environmental, social and governance) issues. While all organisations have their own ESG focus, five common themes emerged that everyone around the table is currently grappling with:

1. Compliance with regulation

Keeping abreast of regulation, particularly for global organisations, operating across multiple jurisdictions, is a huge task. Translating those obligations into an operational framework, without creating multiple different models across the organisation, is even more difficult.

2. Managing reputational risk

Ensuring that an organisation has one ‘source of truth’ and that everyone is aware of how to communicate it is tricky. For organisations operating across different jurisdictions, not only do regulations vary, but so do opinions. Reputational risk differs depending on the location of the business.

3. Embedding ESG across the organisation

ESG isn’t a standalone specialism; it needs to be integrated into all operations and decision making – both within the organisation and with third parties. Raising awareness of the pervasiveness of ESG is the first step.

4. Controlling and influencing the actions of others

Once the organisation’s agenda and priorities have been set, attention needs to turn to third parties. Supply chains (or, more accurately, supply webs) will differ depending on the organisation’s mission, but, whatever the nature of the business, the challenges are likely to be similar. Issues to consider are: how to obtain information from suppliers (particularly smaller businesses), how best to assess whether that data is useful, and how to monitor and maintain standards throughout the duration of a contract.

5. Balancing the focus – should E, S and G be of equal importance?

While all successful organisations will have effective governance in place, many will have, to date, placed more emphasis on either environmental or social initiatives, depending on the nature of the business. Does this matter, and do all organisations have to cover all elements of E, S and G to the same extent?

At TLT we support clients across all sectors, addressing the challenges set by evolving regulatory requirements and changing expectations from investors, consumers and employees. If you would like to discuss further, please get in touch.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.