The 'L' in ESG

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.

How can we help

  • Environmental Compliance: companies setting up an environmental strategy have to consider all applicable legal and regulatory obligations in their day-to-day business. During deal transactions and their business as usual, PwC Legal can provide support to ensure environmental obligations are met by all stakeholders. On a EU and global level, PwC Legal can set up a compliance dashboard for all applicable EU and national legal frameworks, and provide environmental due diligence services. We assist clients in understanding and complying with the evolving landscape of ESG-related laws, regulations and standards at local, national and international level. 
  • Sustainable Real Estate Development: ESG sets new standards and enforces the existing regulations on real estate developments in all sectors. We set up a sustainable development strategy that  considers all aspects from carbon neutrality and energy efficiency to permits and zoning, mobility, water impact, biodiversity, nitrogen, deforestation, pollution and waste management. PwC Legal assists investors, project developers, owners and governments with screening and monitoring their real estate assets and activities.
  • Sustainable Business Projects: sustainability aspects are incorporated and applied in various business projects to implement the sustainability strategy. Projects can range from the construction and development of renewable energy to circular economy or waste management. PwC Legal can advise on integrating ESG considerations into the planning, design, and execution of business projects. This involves ensuring that projects align with environmental sustainability principles. We can also provide legal guidance on the development of sustainable infrastructure and facilities, ensuring adherence to environmental and social standards during construction and operation.  
  • ESG litigation and dispute resolution: ESG brings more legal exposure, encompassing civil, administrative and criminal lawsuits. Both for companies failing to take sustainable action as companies engaging in “greenwashing” practices. As public awareness is increasing, individuals and organizations within civil society are more inclined to take legal action against companies deemed negligent towards sustainability. PwC Legal represents clients in administrative or judicial court procedures. It also provides legal advices to prevent litigation risk.
  • Sustainable workforce: people are central to the success of organisations. In addition, the way companies treat their people across their entire value chain is coming under increasing scrutiny. It only takes one badly treated employee, supplier or customer to create a movement against your company, with potentially serious consequences on reputation and financial losses. Creating a sustainable workforce is therefore a key component of your sustainability strategy. PwC Legal can assist you in obtaining equality, diversity, equity and inclusion within your organisation and your reward policies; with designing and implementing the new way of working within your organisation with special attention to well being, flexibility and the respect of social consultation procedures; with setting up or handling your whistleblowing systems and policies; with the development of a compelling employee value proposition with special attention to upskilling and ethical pay. 
  • Responsible investment: Investors look more and more at a company’s performance in terms of the social pillar, 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. They manage risk while capitalising on opportunities, including a vision for the future, setting themselves up for the prosperity and longevity of the organisation. PwC Legal can assist with HR due diligence services both from vendor as buy-side.
  • Employer and supply chain compliance: Organisations that invest in compliance with minimum labour standards clearly show investors, the public and other stakeholders that they prioritize social responsibility, integrity and risk management - supporting long-term value creation. PwC Legal can assist with HR screening to help you understand where your growth areas lie and help you rectify or mitigate potential risks. Already part of an ongoing social inspection or litigation? Our team of litigation and conflict resolution lawyers are keen to assist.
  • Governance legal design and implementation: board composition is an important aspect of governance that is often considered in the context of ESG. There is no “one-size-fits-all” approach for allocating ESG oversight responsibilities among the board and its committees, and delegation of responsibilities may change over time. How board oversight is effected at any given company depends on specific company circumstances such as the industry, culture, etc. The key for companies is to develop an oversight structure and associated accountability (e.g., via charters and/or corporate governance guidelines), as well as internal processes and procedures, that are appropriate for the company. PwC Legal can assist you in analysing the current board structure and proposing alternatives which will improve its workflow; in drafting a charter/corporate governance guidelines; in implementing ESG formal procedures to create standardisation; in assessing how internal ESG reporting is done and how it can be done more efficiently
  • Disclosure and repoting obligations: one of the methods used by the European Commision to increase sustainability, is by increasing transparency and reporting obligations on non-financial information. Some directives have already entered into force (NFRD and SFDR) and with the CSRD recently accepted, more are on the way. It has become more crucial than ever for companies to be aware and complaint of all reporting obligations which may apply to them. PwC Legal can assist with all ESG related compliance issues.
  • Impact on contract management and transactions: considering ESG in the context of M&A can help ensure that the transaction is not only financially sound, but also aligns with the values and priorities of the acquiring company and its stakeholders. This will help support the long-term success and sustainability of the company. PwC Legal can assist with ESG Due Diligence to help you spot any current or potential sustainability risks; in analysing ESG reports and can assist transferring the findings to specific ESG warranties & indemnities; with material business contracts need revisions to capture ESG. 
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Els Empereur

Els Empereur

Advocaat Vennoot / Avocat Associé, PwC Legal BV/SRL

Tel: +32 494 57 15 50

Pascale Moreau

Pascale Moreau

Partner, PwC Legal BV/SRL

Tel: +32 479 90 02 76

Pierre Queritet

Pierre Queritet

Advocaat Vennoot / Avocat Associé, PwC Legal BV/SRL

Tel: +32 475 91 05 02