Crucial legal factors in solving today’s sustainability challenges
Sustainability is often referred to as ESG, an acronym that stands for Environment, Social and Governance. These three factors can be used to measure and tell the story of the sustainability and societal impact of a company. Today, managing a company’s legal considerations means thinking about these environmental, social and governance issues. Done right, this goes well beyond ticking boxes. It’s about making a difference - for your business and our world.
- The Environmental factor considers how a company performs as a steward of the physical environment. It takes into account a company’s utilisation of natural resources and the effect of its operations on the environment.
- The Social factor specifically concerns the way in which a company manages its stakeholders and considers stakeholder welfare. It involves, for example, a company’s relationships with its workforce and the unions, health, safety & wellbeing, diversity and inclusion and human rights and respect of minimal labour conditions. Whether it is in an M&A environment, in relation to your own workforce or your supply chain, social sustainability criteria are gaining importance as they are increasingly seen as indicators of the future ability to create long-term value and sustainable returns for a diverse group of stakeholders.
- The Governance factor measures the sustainability in a company’s decision-making, from sovereigns’ policymaking to the distribution of rights and responsibilities among different participants in corporations, including the board of directors, managers, shareholders, and stakeholders. General and Corporate Counsels which deal with governance should consider the impact of ESG on the overall group structure, the increasing director liability and duty of care, as well as governance model.
Managing legal risks while capitalising on opportunities
The regulatory framework is designed to drive change, but compliance is not the only driver for business transformation. An ever-growing number of investors and stakeholders expect companies to pursue sustainability, to address risks such as climate change and social injustice and to commit to transparency, sustainable real estate, diversity, inclusion and fair pay. Meeting this demand adds value to your business and helps ensure its long term resilience.
At the same time, standards and hard law regulations around ESG are expanding rapidly at local, national, EU and global levels. They range from (Non-)Financial and Corporate Sustainability Reporting Directives, over Green Taxes such as CBAM, upcoming Corporate Supply Chain Due Diligence directive, Anti-bribery and Corruption Laws, etc…
These continually evolving regulations – as well as society’s rising expectations around sustainability – result in increasing demands for sustainability-focused legal services. The legal aspect is key to meet sustainability goals and to create sustained outcomes that drive value and fuel growth, whilst strengthening our environment and societies. We guide our clients through this changing landscape both from a transformation and a compliance perspective.
At PwC Legal we focus on the unique challenges faced by each business. We can assist businesses to keep up with ongoing changes and best practices during complex challenges with compliance.
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