Sustainability and the Practice of Law: The Next Frontier
Sustainability is currently the hottest topic in the business world. In recent years it has come to dominate board agendas, news and press releases, executive meetings, and annual reports to investors. The pressure is on companies to develop, enact, document, and substantiate sustainability plans. What was once considered forward-thinking and futuristic is now necessary to be considered a good corporate citizen.
Most Fortune 500 and S&P 500 companies report annually and in-depth on their corporate sustainability goals. Small and medium enterprises, which employ the vast majority of people worldwide, are following suit. The South Carolina Small Business Chamber of Commerce, for example, has partnered with the Green Business Bureau to bring the Bureau’s globally recognized sustainability certification program to the state’s small business community. The partnership was formed to “enable businesses and their employees to personally work to achieve their environmental and economic goals.” In November 2022, Ethel Bunch, founder and head of Sustain SC, South Carolina’s leading sustainability organization, traveled to Egypt to represent the state on a global stage by serving as a panelist at the 27th United Nations Climate Change Conference (“COP27”). The South Carolina Department of Commerce has a dedicated sustainability webpage which touts South Carolina’s “public-private partnerships, state-led initiatives, and upstanding corporate citizens,” and describes the state as having “some of the United States’ most diverse ecosystems and natural features.” With great assets comes great responsibility. Cue corporate sustainability.
Stakeholders are demanding answers from companies regarding their stance on sustainability. Consequently, corporate clients need and expect their attorneys to provide more than traditional, matter-specific legal advice. What is corporate sustainability? What can attorneys do to help clients navigate this new reality? How can law firms walk the sustainability talk by adapting their own business practices?
WHAT IS CORPORATE SUSTAINABILITY?
Corporate sustainability is intentional, holistic business - proactively creating new opportunities to add value and enable more investment, innovation, and incentives for stakeholders (e.g., investors, consumers, prospective and current employees, regulators, lawmakers, public interest organizations) to favor an entity over its competitors. Corporate sustainability is a recognition that a business must do more than simply focus on balance sheets and income statements to remain relevant and resilient over time.
A broad scope of concepts and principles fall under the umbrella of sustainability. Attorneys who serve organizations (e.g., public, private, non-profit, governmental) should have a working understanding of corporate sustainability. Environmental, Social and Governance (ESG) considerations are the three foundational areas of corporate sustainability. An ESG or sustainability-centered approach to business considers non-financial factors that nonetheless have financial implications. Profit will always matter, but sustainable organizations recognize that the traditional bottom line is but one of multiple success metrics.
Sustainable organizations integrate environmental, economic, ethical, and social responsibilities into their business strategies and organizational cultures. The environmental aspects of corporate sustainability are the ones that get the most attention. A genuine commitment to corporate sustainability, however, requires much more than a promise to reduce carbon emissions.
We saw some of the consequences of non-sustainable business both during the Great Recession of the early 2000's and again more recently with the COVID-19 pandemic. Small businesses aside, many companies that suffered the hardest hits had non-sustainable business practices. They were over-staffed, had under-saved, were operating nowhere near maximum efficiency, and were under-educated and under-invested in the communities and environments from which they pulled human and natural resources. Although no one could have perfectly predicted these catastrophes, 2008 was not the first recession and 2020 was not the first pandemic the United States had experienced. These events, among others, have rocket-fueled the corporate sustainability movement.
SUSTAINABILITY AND CLIENT REPRESENTATION – ECLIPSE THE COMPETITION
What more can a client ask for than an attorney whose services enable them to minimize reputational risks and increase efficiency, impact, and profit by reframing their business models and existing systems to adapt to evolving stakeholder needs? The sole practitioner, small, medium, and large firm equally possess valuable intellectual and social capital to add this type of value to clients’ operations. The more distinctive value an attorney brings, the greater return on investment for the client, and the more likely the client is to retain the attorney for future needs. What can your firm do that sets it apart from the rest?
Listening to and learning from the client is key. Communicating with the client about how their actions and outcomes align (or misalign) with their stated values and what business concerns the client has will inform the attorney’s sustainability recommendations. It may also help to bring non-legal minds to the table. Experts can be useful outside of litigation. In fact, doing so during the sustainability planning process can prevent or minimize future litigation risks.
Some clients may already be doing things that fall under the umbrella of sustainability but may not be doing so in an organized, strategic manner, or may not be measuring and reporting their efforts in a manner that captures the attention and favor of stakeholders. Other clients may want to implement sustainability initiatives but are unsure where to start. A legal mind is already uniquely equipped to help clients avoid negative publicity for unfulfilled promises or allegations of misrepresentation or fraud. A sustainability-informed attorney can guide clients to even greater heights as they embark on their missions to better business. Ambitious corporate promises come a dime a dozen. Sustainability is measured through an organization’s ability to follow through, remain transparent, and timely deliver results on those promises.
A UNIVERSE OF OPPORTUNITY FOR ATTORNEYS
If you have a current or prospective client that excels in areas like employee benefits, supply chain practices, and charitable giving, they could benefit from an attorney versed in the internationally-recognized B Corporation certification process. B Corporation certification is administered by B Lab, which describes its certification process as “holistic, not exclusively focused on a single social or environmental issue.” The process is rigorous (includes a mandatory re-verification every three years), document-intensive, and “requires engaging teams and departments across [the] company.” South Carolina is already home to several Certified B Corporations, including a craft brewery and a national recruiting agency that provides free career coaching to a domestic violence survivor for every candidate-client that secures employment through the agency.
In December 2022, Reuters reported “seeing corporate ESG disclosures giving rise to costly securities litigation with corporations being sued for securities fraud based on overstating or misstating their ESG commitments and shareholder litigation against officers and directors for failing to ensure diverse candidates for board seats.” If you have a current or prospective client that is regulated by the Securities and Exchange Commission (SEC), they could benefit from an attorney up to speed with the SEC’s Ongoing Response to Climate and ESG Risks and Opportunities, launched to address soaring “investor demand for climate and other [ESG] information.”
In December 2022, the Federal Trade Commission (FTC) announced that it is seeking public comment on potential updates to its 2012 Guides for the Use of Environmental Marketing Claims (“Green Guides”). The FTC Green Guides counsel against non-specific, vague terms like “eco-friendly” and warn against the use of terms like “degradable” or “recyclable” unless one can show how and when these things happen. The FTC initiated the update process “based on increasing consumer interest in buying environmentally friendly products” and to “both help marketers make truthful claims and consumers find the products they seek.” An attorney familiar with the Green Guides can be an invaluable resource throughout development, production, and marketing processes for affected clients or clients seeking to enter the green industry.
These are just a few examples of why attorneys who can give both legal and business advice have a competitive advantage and provide superior value.
SUSTAINABLE LAW FIRMS – SURVIVING THE SUPERNOVA
Law firms that integrate sustainability into their own business models tend to experience more economic success. Attorneys can leverage corporate sustainability to generate more business for their clients and their own firms. Attorneys are vendors in their clients’ supply chains. Part of a client’s sustainability journey involves evaluating its supply chain. If a law firm markets itself as a corporate sustainability advisor, the law firm itself should be operating sustainably and should be reporting on its priorities, efforts, and impact.
THE BIG BANG – INTERNAL ORGANIZATION
It is important to develop an internal sustainability program tailored to the firm’s values, strengths, clients (both current and prospective), and goals. What works for one firm may not work for the next. Law firms should approach sustainability with the firm’s strategic plan in mind. A firm’s managing partners and practice group leaders set the tone for the entire organization. Once firm management is on board and achieves internal buy-in, firm-wide education and training can equip everyone in the firm to contribute to the cause and help promote the message externally.
Some firms begin by establishing a group or committee comprised of attorneys and staff. Other firms begin by identifying sustainability starting points in each of their practice groups and form a sustainability/ESG steering committee comprised of at least one attorney from each group. Reuters noted that law firms “with existing expertise around clean energy, employment contracts, and board governance have elements of an ESG practice, even if those efforts aren’t overtly pitched as such. Within these areas, however, corporation clients – because of pressure from investors, shareholders, and regulators – are asking more detailed questions around emerging ESG-related operational and financial risks…” If members of the team are apprehensive about sustainability, starting off by tackling low-hanging fruit like community impact can help break the ice.
Ideally, every attorney and practice group in the law firm weaves aspects of sustainability into their work. Sustainability is not effective as a standalone initiative. Attorneys must be open to breaking out of the silo approach to practicing law and willing to adopt a cross-practice approach to sustainability. Attorneys can still maintain their respective practice identities while working together to advise clients on corporate sustainability.
SMALL STEPS FOR LAW FIRMS, GIANT LEAPS TOWARD SUSTAINABILITY
Law firms are businesses, too, and can use the same sustainability concepts their corporate clients are integrating into their business models. Making sustainability-focused changes within a firm indicates to clients, employees, the public, and other stakeholders that the firm has long-term success in mind and is leading by example.
· Has the firm calculated transportation costs and developed a plan to reduce what it spends on transportation – both in dollars and in carbon emissions? Is that flight to meet a witness or hold a client meeting in-person necessary? Has the firm provided the client a detailed estimate of what can be saved (both in dollars and in carbon emissions) by the attorney’s remote attendance?
· If attorney travel by car for client matters or conferences cannot be avoided, carpooling should be encouraged or required. Many corporate clients have policies in place requiring carpooling when multiple people from the same office/geographic location are traveling to the same destination.
· Has the firm considered making hybrid remote/in-office work part of its business model? Doing so has environmental and social benefits. There are many ways to design this so the office halls do not become sparsely or unpredictably populated.
· Has the firm assessed how much paper it uses and for what? Research shows that simply reducing the number of printers in an office can help reduce the amount of paper used by employees. Convenience can lead to waste.
· Has the firm researched the vendors it uses for things like paper products, breakroom supplies, office supplies, catering, and firm retreats? If so, are local vendors with direct ties to the community used as often as possible? Doing so not only reduces the carbon emissions associated with transportation of goods and services, it also helps promote local business and increases the firm’s community impact.
· Has the firm reconsidered its approach to pro bono? Could the firm more meaningfully impact those in need by increasing direct representation and volunteering and defocusing on board service and sponsorships?
· Has the firm surveyed its attorneys to determine how many self-identify as multilingual, as first-generation attorneys, as attorneys who followed non-traditional career paths (started a family or entered the workplace before going to law school), or as having non-traditional undergraduate majors? Identifying the unique experiences and perspectives a firm’s attorneys and staff bring to the table is key to assessing and taking giant leaps toward sustainability.
THE NEXT FRONTIER
The competent attorney advises clients how to navigate today’s challenges. The sustainability-minded attorney recognizes what tomorrow’s challenges will be and how the client should do business now to get in front of them. The sustainability-minded attorney draws on their legal experiences and their life, business, and social experiences to develop stakeholder-driven solutions for their clients.
Sustainability is here to stay and impossible to ignore. If embraced and harnessed, sustainability creates a launchpad for attorneys to generate new clients and make themselves invaluable in the eyes of existing ones. Attorneys unprepared for this next frontier risk losing business, talent, and credibility. Your clients have no choice but to gravitate toward it – when will you?
Stinson Woodward Ferguson is a South Carolina attorney and businesswoman with over a decade of experience in law, business management, government service, and non-profit. She is a Certified Lean Six Sigma Green Belt; a Certified Sustainability Consultant; a Certified Sustainability ESG (Environmental, Social, and Governance) Practitioner; and Certified in Sustainable Management. In addition to a Bachelor of Arts (B.A.) and a Juris Doctor (J.D.), she has a Master of Laws Degree in Environmental Law (LL.M.), with a concentration in Energy Law and Policy.
