Over the past few years, businesses are increasingly gaining a conscience regarding the need to address sustainability-related issues. Owing to this newfound corporate awakening, environmental, social, and governance (ESG) initiatives have slowly transitioned from being beneficial add-ons to becoming business imperatives. ESG has become a focal point for investors, customers, suppliers, commercial partners, regulators, and other key stakeholders in the supply chain. Earlier this year, a report published by Morgan Stanley revealed that more than three-quarters of global investors are interested in sustainable investing, and believe that strong ESG practices can lead to higher financial returns.

With the evolving landscape around sustainability and increasing relevance of ESG, an in-house counsel is best positioned to implement an effective ESG strategy which intersects various facets of law, business ethics and risk mitigation. As vigilant guardians of the corporate ecosystem, in-house lawyers are best placed to spearhead the implementation of ESG initiatives and integrate ESG considerations into the core of corporate decision-making processes.

Whether you are the general counsel of a rapidly growing start-up or a large multi-billion corporation, racing to generate revenue for stakeholders, you must understand your duty to influence sustainability, social responsibility, and governance through your business practices. The following are a few key points that a general counsel should consider while implementing an ESG framework, keeping in mind organisational requirements:

Identifying potential risks

The first step in setting up an effective ESG programme is to identify and align the existing corporate initiatives (such as inclusion and diversity practices, recycling, waste management etc.) with the company’s vision. One of the ways to do this would be to conduct ESG due diligence for the organisation either independently or by working with specialised ESG consultants in this space. The diligence report will help highlight areas that need the most focus. Based on this, you can work with key company stakeholders and prepare an ESG policy and overall ESG strategy in line with the company’s vision that incorporates the grassroots initiatives already existing within the organisation, thereby laying a strong foundation for your ESG framework.

Implementation of strategy

An ESG strategy cannot be implemented in isolation and cross-functional team collaboration is imperative in ensuring its successful implementation. ESG education is also vital to achieve aware-ness of the need and benefits of an ESG program by way of driving specialised seminars, workshops and regular trainings within the organisation. Thereafter, in order to facilitate periodic discussions and accountability regarding the progress of ESG initiatives, one may con-sider establishing an ESG committee consisting of representatives from various departments. This committee should be responsible for overseeing the implementation of the ESG framework, identifying training needs, reviewing ESG performance against key identified metrics, monitoring compliance with applicable laws and responding to investors, and auditors based on requisitions received.

Board and investor engagement While legal and regulatory ESG frame-works may exempt certain companies from ESG reporting and other requirements, at a time when investor decisions are influenced by a company’s ESG performance, it is essential to maintain transparency and accountability to gain credibility. This is where the “governance” in ESG takes precedence – where an in-house counsel must establish com-prehensive ESG reporting mechanisms to disclose and present the organisation’s stand on its ESG roadmap and journey. By keeping the board of directors and investors apprised regarding the company’s ESG performance metrics and implementing effective accountability and committee reporting structures, general counsel can ensure the integration of ESG and sustainability into corporate culture and strategy.

Long-term sustainability

The benefits of incorporating ESG initiatives in the corporate framework are broader than only fulfilling one’s environmental and social responsibilities. A GC must look at long-term impacts on the business and take an aerial view while considering the implementation of ESG norms. Higher financial returns, better market engagement, improved investor and employee engagement are some of the strategic advantages of a comprehensive ESG strategy that will ensure your organisation enjoys a competitive edge.