There has been a seismic shift in the way the corporate world views Environmental, Social and Governance (ESG) factors. ESG is no longer an incidental consideration when pursuing business and investment opportunities; today, it drives business strategy, performance and sustainable value creation.
Concerns about the environment and social justice are driving consumer behaviour, new laws and regulations and capital allocation decisions by investors. The physical impacts of climate change on business operations, including rising temperatures, wildfires and extreme weather, have increased operational risk and the transitional effects of laws and regulations seeking to reduce carbon emissions and lower environmental impacts are forcing businesses to re-examine their approach. At the same time, changing demographics, widespread use of technology and a renewed focus on health and safety are changing the corporation’s relationships with its employees, communities and consumers.
Increasingly, companies’ organizational, financial and human resources decision-making processes are being scrutinized through an ESG lens, with potentially grave business and reputational consequences if they are not in line with current expectations of corporate behaviour.
Investor interest in ESG factors has never been higher, and it continues to grow. Any past concern that it would be a breach of fiduciary duty for pension funds and other financial investors to include ESG considerations when making plan investments is long gone. It is now generally recognized that such matters can and should be factored into investment practices. Everyone from institutional to individual investors is analyzing companies’ commitments to ESG practices before deciding where to invest. For private equity firms, ESG has become a key factor in investment decision-making and risk mitigation, and part of a strategy for generating superior long-term returns.
Considering ESG factors is no longer a “nice to have”; it is a necessity.
Rapidly evolving change
An explosion of interest has generated a growing public clamour for new regulations, increased and rigorous disclosure, and new ways to raise and invest capital. From new laws on carbon emissions and emissions trading, to litigation on climate, environmental, social and health matters to green bonds and loans, the risks and opportunities are many and changing.
As changes accelerate, it’s critical when navigating the evolving ESG landscape to seek guidance from experts with a depth of knowledge and expertise and an understanding of legal trends to provide advice on what matters now, and an informed perspective on the changes to come.
Prioritizing ESG
Wide-ranging interest in ESG means there are many stakeholders to consider when making ESG a priority in decision-making, including shareholders, employees, suppliers, customers and the broader community. Therefore, it’s crucial to partner with advisors who can leverage wide-ranging expertise to address such diverse needs and interests effectively.
In this complex environment, a piecemeal approach simply will not suffice. Instead, you need an integrated group of specialized experts to assess your ESG-related risks and ensure your ESG and corporate sustainability mandate is robust.
At Osler, this is precisely our approach. Our Integrated ESG Legal Practice eschews the silos of separate practice areas; instead, professionals from across the firm come together as a group to offer clients strategic, consolidated and comprehensive advice.
Clients regularly turn to Osler’s Integrated ESG Legal Practice as their trusted legal advisor on all ESG-related issues. Our multidisciplinary team of experts can assess your current ESG reality and then provide insight and advice on addressing your organization’s environmental and social objectives and needs.