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The next GC challenge is sustainability, and companies are not prepared for it

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As the apocalyptic effects of environmental degradation accelerate, there are two things we know for sure: the United States government will do very little about it, and companies will face increasing pressure to fill this gap. Corporations have long enjoyed a license of responsibility, developing environmentalism especially as a whitewash of public relations - making consumers feel that it is their fault because they do not recycle, unlike the company’s fault for eviscerating resource stocks. natural waste and discarding industrial waste at the other end. But we are approaching the limits of these efforts, with an increasingly skilled body of investors and consumers making decisions based on sustainability. And as environmental efforts become more focused, it will become a top priority for legal departments to guide the company through these new challenges.

With that in mind, Ernst & Young’s EY Law Group and the Harvard Law Center for the Legal Profession interviewed 1,000 general counsel and chief legal officers from companies representing 12 industries in 20 countries to understands how law departments respond to this challenge. . The main conclusion is that the lawyers see the problem looming and try to solve it.

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These are big numbers in general. And yet, only 15% of GCs felt that their bosses “fully appreciate the environmental risks” and only 39% considered that they “fully appreciate the social risks for the organization.”

Keep in mind that the two biggest areas of risk revolve around public perception of a company that is responsible for sustainability. BP received the blows after the Deepwater Horizon leaked, but people continued to reach the local pumps. Fast forward and lawyers are not as optimistic about the chances of the public continuing to let the past go.

That being said, there is a small disconnect when it comes to who is putting pressure right now:

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Because, although reputational damage is the biggest concern identified, customers and the general public do not receive the top billing in this chart. Even if the general public attacks, the long-term threat is still felt - for the time being - from investments.

“We expect to see a change here, with law firms placing more emphasis on reputational risk management in the future, creating a better balance with regulatory and investment challenges,” said Boris Scholtka, Ernst & Young Law GmbH Energy Law Leader.

Accordingly, the report found that most legal departments plan to expand sustainability efforts in the coming years. Because that’s where the risk increases, especially when it comes to regulators … by which we mean “foreign regulators,” because obviously not in the United States.

Complicating the task of the law department in defining its role is that many environmental and social activities are either conducted collectively or their ownership is divided into different functional departments. As a result, close collaboration is needed throughout the business to stimulate action and accountability. Law departments recognize this need, with 61% of general counsel reporting that they expect to increase collaboration with the business in the field of sustainability.

But this disconnect between the legal and the rest of the business leadership must be smoothed out. While 69% of GCs said that social objectives are “clearly defined”, only 22% said the same environmental objectives of the entity. Financial and environmental goals cannot be truly balanced when most companies cannot agree on those goals.

There, some consultations can help make a difference. As you might have guessed, EY Law offers this help. But no matter how a company chooses to approach the issue, it comes and goes on the board of the general counsel. It is best to be proactive about this before it is too late.


Head shotJoe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you are interested in law, politics and a healthy dose of college sports news. Joe is also the CEO of RPN Executive Search.

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