There is a difference between launching an ESG program and launching a successful ESG program, according to three experts on a June 1, 2023 Bar Association of San Francisco CLE panel moderated by Catherine W. Johnson, founder of Environmental General Counsel PC. The panel’s focus was on the “E” (environmental) issues in the ESG framework; however, the panel also addressed concepts applicable to rolling out all components of ESG programs.
Large companies may launch scores of new programs every year, creating a risk of “program burnout,” cautioned Joshua Jones, a regulatory compliance expert. Jones advised minimizing the risk of program burnout during an ESG launch by explaining the benefits of the program – both the benefits to the company and to advancing the company’s commitment to environmental stewardship.
Sally J. Curley, founder of Curley Global IR, LLC, described ESG as a tool to identify, assess and manage risks – risks that are unique to each company. Likewise, Curley emphasized – drawing on her experience as an advisor to Fortune 500 companies on ESG, Governance, and IR issues – each ESG program should be customized to account for a host of factors, including the nature of the business, the company’s business model, culture, and the concerns of its stakeholders. Not every potential ESG measure is appropriate for every company.
Curley and Jones underscored the importance of aligning the ESG strategy with strategic business objectives of the company. The ESG program will have a greater chance of success if it is not simply a free-floating initiative but is a meaningful adjunct to existing company values and objectives.
Alison Torbitt, a partner at Nixon Peabody LLP and co-lead of its Environmental Team and the firm’s Legally Green® sustainability initiative, discussed the importance of data collection for ESG programs – for implementation, internal and external communication, and then tracking the success of the program, which requires engagement of internal sponsors, and may also include the use of sustainability assurance experts.
Torbitt explained that the data collection efforts can extend up and down the supply chain, noting the increasingly common practice of collecting both upstream and downstream data about carbon emissions – meaning, for example, that even professional service providers (including law firms) should be prepared to account to their clients about their own carbon emissions. Consequently, Torbitt concluded, professional service providers, including law firms, cannot simply ignore ESG without facing a potential loss of business.
Torbitt also provided a cautionary note, advising a careful review for accuracy, consistency, and back-up data of all external communications, marketing materials, and disclosures associated with any program, citing the rise of greenwashing claims (and noting the FTC is in the process of revising its Green Guides).
Other issues discussed by the panelists including selecting the appropriate framework for reporting ESG data, understanding the different metrics used by rating agencies, ensuring adherence to pending and existing U.S. and international regulatory disclosure requirements, and leveraging existing company infrastructure to minimize the costs of the program. The BASF panel is now an on-demand program which can be accessed here: Implementing an ESG Program.