From the net zero transition and sustainable finance, to human rights issues in supply chains and understanding corporate purpose, it is crucial to grasp the broad ESG landscape and direction of travel. For businesses of all types the challenge is how to integrate ESG considerations into business as usual and transform aspirations and targets into robust, realisable action plans – certainly no small task.

Good governance is critical for successfully delivering climate transition strategies, integrating ESG into all aspects of business, and navigating challenges along the way. To manage ESG risks and impacts and take advantage of net zero transition opportunities, organisations need a clear purpose, aligned with their values, strategy and culture, as well as effective decision-making frameworks informed through robust stakeholder engagement. Good governance and a healthy corporate culture (with accountable leadership) are the ‘glue’ that holds the ‘E’ and the ‘S’ in ESG together.

To find out more about our work in this area, see:

• Risk & Governance 
• Culture, Governance and Accountability

Focus on the ‘S’ in ESG is set to increase sharply. Issues range from linking executive pay to ESG targets and stakeholder experience, workplace culture, the importance of diversity and inclusion, the heightened awareness of workplace rights, human rights issues in supply chains, workplace activism and employee relations more generally. The pandemic and societal movements including MeToo and Black Lives Matter have helped to propel social issues up the business agenda. ‘S’ issues are increasingly becoming part of regulatory and governance frameworks as structural and disclosure obligations continue to evolve; and the importance of ensuring that any climate transition is a just one is now clear.

To find out more about our work in this area, see:

• Employment & Incentives
• Diversity Faculty
• Workplace activism

One of the key obstacles to better integration of ESG in business decision-making is the lack of good quality data that is relevant, reliable and comparable. Regulators globally are looking to enhance disclosure and reporting regimes for issues such as climate change, sustainability, and diversity & inclusion with significant implications for businesses. Significant change will occur as corporates and firms are required to source data on their own activities and across their business relationships.

To find out more about this area, see:

• IFRS announces creation of International Sustainability Standards Board: a step closer to global disclosure standards
• TCFD publishes updated guidance

The transition to a net zero and more environmentally and socially sustainable economy requires the mobilisation of vast amounts of capital. Sustainable finance is attracting unprecedented levels of investment. Policy initiatives designed to rewire the economy through imposing consistent disclosure requirements (among others) are presenting businesses with new challenges as well as significant opportunities for those who are already transitioning.

To find out more about our work in this area, see:

• Sustainable Finance
• Financial Regulation Group
• Capital Markets
• Pensions ESG

Competition law can be a barrier to companies collaborating on bona fide climate and wider sustainability initiatives. We have seen a marked increase in the number of clients talking to us about competition law and sustainability. From a desire to co-operate to achieve green objectives, to environmental factors that are driving a deal, these issues are coming up again and again. We provide practical guidance for companies who are grappling with the many tricky questions around competitor collaborations, M&A and merger control, State aid, and consumer law issues (such as regulatory scrutiny of greenwashing claims).

To find out more about this area, see Competition and sustainability series.

Regulator, investor and consumer scrutiny of the way companies manage their business relationships and supply chains is ratcheting up. Companies are now looking beyond more traditional methods of supply chain management, which have tended to focus on the commercial aspects of procurement and on supply contingency planning. Companies with emissions reduction targets are extending these down to suppliers. One of the key emerging themes is mandatory due diligence of human rights and environmental issues in supply chains, which will need to be managed alongside unprecedent disruption to global supply chains caused by the Covid-19 pandemic, energy crisis and other geo-political factors.

To find out more about this area, see Managing supply chain risks: reporting and diligence.

Commitment to net zero emissions by 2050 will only be achieved with significant new investment and a rapid change in the sourcing and use of some of our most fundamental commodities, energy and water. The technological revolution combined with ESG pressure is propelling the global economy towards the energy transition, decarbonisation and adaptation. The response will be one of the most transformative business drivers of the next few decades.

To find out more about our work in this area, see:

• A Net Zero System
• Energy & Infrastructure
• Net Zero Tech

Heightened scrutiny of ESG issues is having a marked impact on transactions, in particular climate-related issues. The ripples are being felt across a wide spectrum of transaction types including demergers, disposals, acquisitions, JVs and IPOs. Increasing numbers of transactions are being driven by ESG considerations, and businesses are having to work out how best to integrate ESG into the existing transactional ecosystem (including how GHG emissions and other ESG factors are allocated, accounted for and managed).

To find out more about our work in this area, see Corporate/Mergers and Acquisitions.

Climate and other ESG litigation is on the rise, often as a tool to push organisations to engage with the net zero transition with greater ambition, and to improve their ESG performance (e.g. in relation to human rights). Regulators are also starting to take action, particularly where ‘greenwashing’ is concerned. Focus on corporate disclosures and product claims is only likely to increase as requirements tighten.

To find out more about our work in this area, see:

• Climate Change Litigation
• Dispute Resolution