Overall, it’s thought that a General Counsel is well-suited to drive a company’s efforts in relation to Environmental, Social and Governance (ESG) due to their strategic insight, ability to engage with and coordinate input from colleagues drawn from different functions, and their obvious expertise in managing legal and compliance risks. The role of a GC is evolving to encompass a broader scope of responsibilities, reflecting the increasing importance of ESG in corporate governance, but is the GC and ESG a match made in heaven?
This interview explores the crucial role of General Counsel in ESG implementation and corporate governance.
Steven Webb, former General Counsel & Company Secretary at a number of diverse UK PLCs, shares insights on legal risk management and ESG leadership.
Firstly, how did your interest in ESG develop?
For most of my near 30-year career as General Counsel and Company Secretary at a number of UK PLCs I was responsible for ESG, all the way from defining strategy, through to implementing actions to meet targets and covering internal and external reporting. I didn’t expect that, or seek it out but, in one of life’s happy accidents, it feels like it chose me.
In the early 2000’s I was with a global electronics distribution business when the Chairman received a letter that had been sent to all of the top 350 listed companies by the Minister for the Environment asking that they start reporting on their energy and water use and how much waste they produced. The Chairman passed the letter to me with the short instruction “deal with this”.
The acronym in fashion at that time was CSR – Corporate Social Responsibility and, rather than just looking at the narrow requirements of the Minister’s letter, I decided it would make sense to look at everything the business was doing that could be encapsulated in CSR. So began my interest in this area, and it remained one part of my responsibilities for the following 22 years and in different businesses.
How did you transition from General Counsel to ESG consultant?
I retired from legal work at the end of 2022 and am now relishing the opportunity to add to my hands-on experience with more structured learning, including embarking on a Post Graduate Certificate in Sustainable Business at the Cambridge Institute for Sustainability Leadership.
For the last six years I have also been on the board of a not-for-profit organisation that provides specialist consultancy services to businesses on their social impact and I am now able to spend more time supporting their wonderful work.
Why are General Counsel best placed to lead on ESG initiatives?
ESG leadership for General Counsel has become increasingly important as corporations face growing pressure to address sustainability issues.
Time and distance has allowed me to reflect on the reasons for this, and how GCs might need to adapt their usual approach.
There are four main reasons for a GCs suitability:
- There is lots of regulation involved in ESG
- There are risks in getting it wrong
- There can be a lot of detail to absorb, sift and distil
- Doing ESG well is a business opportunity
There is lots of regulation involved in ESG
There are myriad regulations (and associated acronyms) and from many sources – SECR, CRFD, TCFD, CRSD, CSDDD, IFRS S1 and S2 – are all part of the alphabet soup and it will often take a lawyer to untangle what applies and what doesn’t.
There are risks in getting it wrong
Assessing risk is perhaps the most fundamental part of a GC’s role.
In my experience our colleagues don’t accept being told “you could do A or you could do B and here are the risks of each”. They expect their General Counsel to say what the organisation should do.
ESG is no different to many other areas of regulation in having circumstances where there is a range of possible approaches and being clear on which is the right one for your organisation is where a GC can add value.
There can be a lot of detail to absorb, sift and distil
Part of legal training is the ability to do this. At its most basic, reading every word of a document, right through to the last page (in case that’s where the really critical information is found) when many others would have given up/skimmed through. Having done that, the skill of picking out the really important elements and presenting them in a clear and logical way.
Doing ESG well is a business opportunity
Focusing too heavily on risk can mean missing the opportunities. GCs usually have a very broad understanding of the strategy of their business and how that translates into day-to-day operations. This makes them ideally placed to spot opportunities, if they have that mindset.
What adaptations do General Counsel need to make in their approach to ESG?
There are two important ones in my view.
Firstly, don’t start from compliance.
A business that decides its ESG approach from the perspective of doing what it has to do in order to meet a specific regulation, reporting requirement or assessment standard will probably have half-hearted implementation and miss the opportunities.
Businesses should start by thinking about their priorities, opportunities and challenges and how addressing those will fall within the ambit of ESG.
Two very basic examples:
Most businesses want to reduce costs. Reducing energy consumption will do that, while also reducing environmental impact.
All businesses need to attract and retain talent and there is lots of evidence that Gen Z wants to work for organisations that demonstrate that they are good global citizens.
Once you have done this thinking, and decided on what actions you are going to take, report on them. If there is a residual list of things you have to do to be compliant, so be it, but at least most of your efforts will be directed to things that really matter and where the organisation can have the most impact.
Secondly, the ‘story’ matters!
As General Counsel, you will know (and care) that your organisation is doing what’s required by ESG law or regulation and that you are reporting it accurately, but that message isn’t going to inspire many of your colleagues.
They will respond much more positively to understanding how the business is improving, not only in financial terms, but also in being an organisation they can have pride in – one that is reducing its environmental impact, providing a diverse workplace that promotes well-being and being respected for the quality of the products or services it provides and engaging with its local communities.
How can you support General Counsel in this regard?
If any GC feels that any of this resonates with them, or they have any questions about how to approach ESG, I am happy to have a conversation to see if there is anything I can do to help ease the burden or put them on the right path. All they need to do is connect with me on Linkedin and/or send me a direct message.
As corporate governance evolves, the synergy between General Counsel and ESG initiatives becomes increasingly vital. Legal and company secretarial departments play a crucial role in implementing sustainable practices, managing ESG risks, and driving corporate responsibility.
For more insights on ESG leadership and legal risk management in corporate governance, connect with Steven Webb on LinkedIn.
If you are looking to hire a General Counsel, get in touch with me for an initial discovery call.
