As we look back on 2021, we wanted to take the time to reflect on ESG and COP 26, and what this means for the legal sector as a whole. The most recent ESG market review published in November highlighted the surge in popularity for investment as well as how this became a trend throughout the entirety of 2021.
This was largely due to the shift in focus after the height of the 2020 pandemic forced individuals and businesses to look at how they were operating and where they were investing.
Legal Cheek supports this, highlighting in a recent article that “Environmental, social, and governance (ESG) matters are quickly rising to the top of the agenda for City law firms and clients alike.”. The author, Clare Burgess, Partner at Clifford Chance, broke down that the ESG agenda has grown exponentially in the last decade, but particularly in the last five years.
Within the Legal sector there has been a focus on a number of social issues aside from ESG, with #MeToo and Black Lives Matter being the most prevalent over the past few years. It’s clear that the priorities of law firms are shifting from what we could consider “traditional” and instead making important changes to ensure that they can service their clients in a modern, up to date way.
So, does the legal sector now need to be a force for good?
In October 2021, The Guardian released an article evidencing that multiple law firms were complicit in working with fossil fuel clients in over $1tn worth of legal cases (368 in total). This raised a number of valuable points around the part that law firms play in our growing climate crisis, and how they can become more sustainable whilst still supporting clients on difficult cases. It can often be a predicament as there will always be cases within this realm available, however, putting more onus onto law firms to operate sustainably may be the answer.
The same piece by The Guardian highlighted “Law Students for Climate Accountability is calling on law firms to pledge to stop taking on new fossil fuel industry work, phase out their current work by 2025 and ramp up their work for the renewable energy industry and supporting litigation to tackle the climate crisis.”. Although this is a step in the right direction, the proof will be evident only if firms are held accountable year-on-year.
At the start of November, Cop 26 was hosted and brought solicitors into the limelight, as “Climate change is no longer just a problem for governments to deal with.
What’s being discussed at COP26 will impact all solicitors, not just those that deal with environmental and climate change issues” (LawSociety.org). There will be a stringent management process put in place to keep the legal sector accountable from an ESG perspective, specifically the regulatory landscape.
We are seeing an increase in the demand for ESG focused lawyers. The issue, however, lies in which teams these lawyers may be in. We’ve seen interesting backgrounds such as corporate, tax, environmental and regulatory. Due to the relatively new focus on ESG, it has become apparent that most firms do not have a dedicated team but rather individuals who have a focus on ESG. We, however, foresee that this will change in the coming months, such as Kirkland and Ellis who have launched an ESG & Impact team in London.