Engaging today’s employees and attracting tomorrow’s talent – the importance of ESG

Looking around, we see evidence of companies responding to growing environmental, social, and governance (ESG) issues everywhere. Whether it is announcing net-zero emissions targets, closing the ethnicity pay gap, or reducing plastic in packaging.

These efforts are often undertaken to satisfy investor expectations or consumer demand. But another critical stakeholder group mutually benefits with ESG – employees. The key to ESG success, employees are on the frontlines of implementation. What’s more, employees want to work for companies that share their values, making ESG table stakes for talent attraction and retention.

As ESG – environmental, social, and governance – criteria become more important for regulators, investors, and customers, many managers are facing an ESG imperative – to measure ESG risks and track progress. ESG may seem like a fundamental shift in business practices, and in some cases, it may be. Fortunately, however, ESG can be integrated into many familiar business processes, such as the annual cycle of financial reporting. ESG can then be matured through annual iterations to achieve more ambitious targets.

This article outlines the key procedures that businesses need to respond to the ESG imperative, addressing stakeholder needs while creating value:

1. The materiality assessment
2. Goal setting and gap analysis
3. Data collection
4. Reporting
5. Assurance

How can law firms demonstrate ESG commitments? 

Although ESG has been steadily gaining traction in the corporate world and becoming a top priority for many businesses, many law firms are lagging behind. 

This may be because ESG has developed outside of a regulatory landscape. But legislation is beginning to catch up and law firms, as key corporate service providers, are being expected to consult and strategize on ESG for their clients. Companies are relying on their lawyers’ skills to implement internal ESG goals.

Now more than ever, companies are expected to have a positive impact on society and the planet. Customers are increasingly considering sustainability in their purchases, with upwards of 75% of millennials reporting they do so. Investors also expect companies to understand these issues, with the value of sustainable fund assets doubling over the last two years to $2.7 trillion according to Morningstar.

But addressing these stakeholders and attempting corporate sustainability can be an alphabet soup of different terms, topics, and targets. Two of the most common buzzwords are CSR and ESG. While they are often used synonymously, CSR and ESG are distinct concepts. In this article, we will explore their definitions, whether we need both, and how they are evolving.