Environmental, Social and Governance (ESG)

Overview

Businesses face a number of challenges in the current climate. While financial, regulatory, employment and pensions matters may be a priority for now, Environmental, Social and Governance (ESG) issues remain high on board agendas. Discussions are increasing around green growth and how businesses can respond to new opportunities as our environment and society evolves. Doing good is being equated more and more with doing well, making it essential for businesses to understand where ESG risks and rewards may lie.

What is ESG?

ESG covers a range of topics that combine to measure how ethically a company behaves:

  • Environment: climate change, carbon footprint, circular economy, biodiversity, waste, water and resource use, pollution,
  • Social: human rights, labour practices, health & safety, community, diversity & inclusion, systematic racism, pay equity, shareholder activism, corporate purpose,
  • Governance: corporate governance, company ethics, regulatory compliance, executive pay, board diversity, lobbying, approach to taxation

Why ESG is important

ESG has evolved over the past few years and has now become a critical focus for businesses, investors, NGOs, governments, stakeholders, consumers, lenders, insurers and consumers. Expectations of businesses in this dynamic landscape have never been higher.

The potential impact is vast, affecting a number of areas including strategy, reporting, human capital management, operations, risk management and long-term value. While the companies that choose to work with you may take into account your business' ESG performance, there are increasingly other factors to consider.

The rise in benchmarks and indices that track a company's performance on ESG metrics means that the publication of 'warm and fuzzy' sounding pronouncements is no longer enough. ESG has moved from the domain of a PR and Communications team to become a board-level concern. ESG issues present a series of governance risks in relation to reputation, regulating compliance, investment and sales.

However, alongside managing such risks and requirements, there are many opportunities around sustainability and ESG. Those that are forward thinking in this area are likely to thrive in the 'new normal'.

ESG risks in business

ESG risks are increasingly becoming a focus for shareholders, with decisions built on data and planning that considers long-term risk assessments and investment strategies. Institutional investors are likely to ask questions about a range of different areas that can destroy or create value for businesses, from how well they can defend themselves against cyber security attacks to whether senior leadership has diverse backgrounds.

Companies that can demonstrate that they are managing these risks and meeting these standards are better equipped to sustain their operational and financial performance, and ultimately their value for socially responsible investments.

How can we help?

While ESG factors can often be associated with sustainability or Corporate Social Responsibility (CSR), the bottom line is that they are a reflection on how a business or institution manages risk, as well as how they contribute to society. Whatever your current position, there are opportunities now to 'reset' and consider how your business can be better aligned to sustainability goals.

Gowling WLG's specialist team is fully engaged in developments around ESG. Comprising of lawyers working across practice areas in our international offices, the team provides a wide spectrum of advice helping clients to understand their responsibilities and identify where risks and opportunities may lie.

If you are in need of advice and guidance regarding ESG issues, contact one of our teams today.

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ESG factors for businesses

Businesses are doing a deep dive into how critical factors in ESG present risks and require careful management and oversight as well as opportunities to be explored and activated.

In addition to the internal structure and reporting issues and requirements, there are stronger external pressures. Proponents of responsible investing, impact investing and sustainable investing are continually pressing for better and more standardized reporting of Canadian ESG issues. Simultaneously, governments around the globe are continuing the transcendence of "hard" law over "soft" law and originating new and more complex regulatory and compliance programs which create additional risks and obligations for businesses.

Class actions and single plaintiff litigation have opened the door for more far-reaching and impactful jurisprudence that stresses risk management efforts.

The adoption and application of international standards, principles, guidelines and goals, which may impact strategies and operations across a business and in a multiplicity of jurisdictions, have many businesses working diligently in unfamiliar territory.

We can help

Our ESG advisory team provides a wide spectrum of advice helping clients to understand their responsibilities and identify where risks and opportunities may lie.

Our ESG advisory services include Governance, Risk Management, and Due Diligence advice; Investment & Financing options, and Compliance & Reporting in connection with the following:

Our ESG advisory services

Contact our Canadian team

Elizabeth (Beth) Burton
Partner, Financial Services Practice Group Leader (Calgary)

Stephen Pike
Partner

Maya Stano
Partner

Jennifer King
Partner

UK

As the focus on Environmental, Social and Governance (ESG) continues to grow, the priorities of businesses and their stakeholders will need to shift to ensure strategies minimise risk and meet increasing expectations. Your approach to ESG is ultimately a reflection on your accountability and standards that can make or break your value.

In the UK, we take a cross-firm approach, pairing in-depth sector experience with vast practice area knowledge to provide advice on ESG regulation and best practice. Our core team brings together lead professionals from each of the main areas that support ESG matters: environment and sustainability, business and human rights, corporate governance, employment law and commercial contracts.

ESG services

Client Work

  • Environment reporting

    Advised the managers of an investment fund on its annual environmental report and GHG emissions reporting duties. This included undertaking an audit of its reports to ensure compliance.

  • Pensions investment

    Provided training to Thales UK Pension Scheme on the implementation of ESG into the scheme's investment approach.

  • Real estate

    Advised Thakeham Homes on the development of the UK's first zero-carbon community, covering all legal aspects of the site assembly of the sustainability-led project.

Awards & Recognition

Our ESG team combines the knowledge and experience of lawyers from across our different practice-areas. We were proud to be recognised across 12 categories in Chambers Global for 2021. In the UK, we were praised for our "hugely respected" and "outstanding" legal prowess by Chambers & Partners, securing 44 leading rankings in 2021 including the Energy & Natural Resources, Environment, Employment , Pensions and Real Estate categories. In addition, we were recognised by The Legal 500 in 68 practice area rankings, with marked success in service lines such as Projects, Energy & Infrastructure, Pensions and Finance.

Contact our UK team

Ben Stansfield
Partner

Kieran Laird
Partner

Sharon Ayres
Partner

David Lowe
Partner

Simon Stephen
Legal Director