ESG and law. Navigating a critical growth area
With sustainability increasingly a top priority on the societal and corporate agenda, Environmental, Social, and Governance (ESG) has quickly emerged as a significant and specific demand on the legal profession, and it’s growing fast.
The development of ESG policies is a key area where firms can illustrate their preparedness. Law firms that have established ESG practice areas are better prepared to provide corporate clients with their own credentials and policies for promoting and sustaining diversity.
As this is a rapidly changing market, client demand is an important point for firms to consider when assessing their activities and their ability to keep up. Around half of the lawyers (49%) say demand for ESG had stayed the same year on year, while it has increased for just under half (43%). Interestingly, however, this is a slight decline from 50% in 2022.
ESG and law: Looking ahead
Looking ahead to the next three years, ESG will continue to be an important strategic growth area. Half the attorneys (50%) surveyed expect demand to increase – despite a dip from 61% in 2022 – while 45% said demand would stay the same (up from 36% in 2022).
According to the survey just over half (52%) of corporate legal departments currently request sustainability credentials from their law firms – although this has declined significantly since 2022 (67%) – while a significant minority (40%) of corporate legal departments plan to make such a request within the next three years.
Iris Wuisman, Professor of Company Law at Leiden University, comments: – The increasing importance of ESG does not only influence the type of legal advice and support provided by the legal industry to clients. It also increasingly requires the legal industry itself to consider what type of clients they serve, how they care for their own workforce, and what their own impact is on the environment.