Why are in-house lawyers well-placed to drive change in their organisations? 

It is no longer enough to merely provide competent legal technical advice on a company’s compliance with the law. The traditional view of in-house legal practice – founded on the clear demarcation between legality and morality, with in-house lawyers providing advice on the law, but leaving the question of morality untouched – is outdated. This is especially so today, when companies are under intense pressure from investors, activists, clients, employees, regulators and consumers to carry out business with integrity and transparency. The current business climate demands an organisation to thoroughly examine the adequacy of its ESG policies and the implementation of these policies.

Business colleagues increasingly look towards their in-house counsels as the organisation’s moral compass, shaping and influencing internal ESG behaviour. This may be because traditionally, the in-house counsel’s key job is to assess, manage and mitigate risk; and the climate crisis is arguably one of the biggest existential risks faced by businesses and the world alike. Granted, not everything is a legal issue, but it can be argued that almost everything, especially ESG related issues, is related to risk – and risk management falls squarely into the traditional domain of the in-house counsel.

So why are in-house lawyers perfectly placed to drive ESG changes within their organisations? It is undeniable that most in-house lawyers work across different business departments and functions within their corporations. Consequently, they have a rare, holistic view of the organisation.

An in-house lawyer may advice the board on a major commercial project but is also simultaneously fully aware of the company’s manufacturing process downstream. This unique, cross-functional knowledge gives the in-house lawyer access to a wide range of stakeholders and senior leaders in various departments; and an aerial view of the business only shared by the CEO and CFO. The in-house lawyer has an ideal platform to exert real influence within the company.

This perspective enables the in-house counsel to give wholistic advice to the organisation and its senior leaders on the steps required to comply with local legislations on sustainability, overarching international instruments, greenwashing avoidance. It will also promote proactive compliance with upcoming sustainability regulations to take the business further.

It is undeniable that in recent years, laws and regulations with mandatory requirements relating to the climate and environment have increasingly been introduced. Some EU and Asian regulators are already demanding reporting obligations on ESG matters, and it is foreseeable that this trend will only grow as many countries are committing to climate goals aligned with the Paris Agreement and the ideals of COP27.

This slew of sustainability legislations is perfect; it provides a golden opportunity for in-house counsels to become an indispensable thought partner with senior management. This will encourage the joint formulation of new ESG policies and governance structures to comply with the regulations and realities of today’s business environment. It also presents the perfect opportunity for in-house counsel to educate their entire organisation on the importance and benefits of sustainability.

Consequently, the in-house counsel’s position is unique, as we are in the best place to shape organisational behaviour on ESG matters. On one hand, we can emphasise to senior management that any non-compliance with sustainability regulations, or an over exaggeration of sustainability credentials may attract regulatory scrutiny and litigation; on the other hand, we can educate the organisation that companies with sustainability incorporated in their business practices often financially outperform companies that ignore them.