A law unto themselves? How legal firms can win credibility through ESG reporting

by Ruth Wood

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Lawyers have been at the vanguard of corporate ESG reporting since the earliest days, advising organisations on how to navigate rapidly evolving rules.

But when it comes to their own sustainability disclosures, they have been less forthcoming. Despite undeniable expertise in the field, only 25% of UK law firms have a well-developed ESG policy, while around three in 10 have either an ESG policy that is still in the early stages of implementation or no policy at all, according to research by PwC.

Are they missing a trick? We think so. Here we look at four key fronts upon which progressive law firms can attract talent, business and respect through high-quality sustainability reporting.

Smoothing the path for clients

As professional services people, law firms are rarely carbon-intensive. However, their trusted counsel on everything from climate risk mitigation to decarbonisation and governance can have a huge influence on the carbon footprints of their clients.

What better way to inspire trust than by showcasing this expertise in a well-crafted ESG report and simultaneously showing clients how it’s done? The very process of implementing and disclosing an ESG strategy can be illuminating and mutually beneficial for law firms and their clients. As one major law firm puts it: “What we learn from advising our clients can inform how our firm operates as a responsible business and vice versa.”

Increasingly, law firms are being asked by clients to provide data on their Scope 1 and Scope 2 greenhouse gas (GHG) emissions as these are the indirect Scope 3 emissions in their clients’ supply chains. Meanwhile, in the UK, some of the biggest law firms are already required to make climate-related financial disclosures.

With regulators around the world edging towards mandatory climate disclosures for all, demands on the sector are only set to intensify. Law firms that get ahead of regulation and demonstrate their competence in the field could enhance their reputation and attract new business from clients who need to partner with firms that are ready to disclose their emissions.

Walking the talk on risk management

A lack of long-term thinking and scant evidence of rigorous risk management damages the credibility of many sustainability reports, according to a recent survey of institutional investors in 23 countries.

Yet these qualities are hallmarks of the legal profession. Lawyers are experts at scouring the regulatory horizon and developing a granular understanding of draft legislation, standards and frameworks to help their clients mitigate risk and capitalise on opportunities.

The sector has everything to gain from demonstrating through ESG disclosures that it is effective at mitigating risk, prepared for the transition to a low-carbon economy and keeping pace with the rapidly evolving alphabet soup of regulations, standards and frameworks. By securing third-party assurance on ESG matters, for example by submitting emissions reduction targets to the Science Based Targets initiative (SBTi) or attaining ISO 14001 (environmental management) certification, law firms could cement their reputation for transparency, integrity and credibility. They could also be seen as more innovative and forward-thinking than their competitors, giving them an edge in the marketplace.

Challenging stereotypes of elitism

Despite progress in recent years, the legal sector is still struggling to shake off its reputation for being a white, male, privileged closed shop. Lawyers themselves are often the first to point the finger – in a 2019 survey, three-quarters of UK lawyers said they felt the legal industry had a diversity problem, with one in five saying they would describe it as “a bit of a bubble”.

More recently, lawyers told the Financial Times how they had been mocked for wearing the wrong shoes, having a “working class” accent, or attending a state school.

Black professionals are particularly underrepresented in the sector, constituting less than 1% of partners at major UK legal firms and just 4.5% of lawyers in the United States, where they make up 13.4% of the population, according to the American Bar Association. Women lawyers are better represented in the UK than in the US but still make up only 24% of full equity partners at the top 100 law firms.

For firms with strong initiatives on the fronts of diversity, equity and inclusion (DEI) and social mobility, this means that ESG reporting offers a huge opportunity to pull away from the pack and stand out as attractive employers. Staff recruitment and retention is the number one challenge for most law firms, but through insightful ESG reporting they can change the narrative and broaden their talent pools.

Guarding a proud pro bono tradition

Young professionals coming up through the ranks consistently tell researchers that they want to work for businesses that have a positive impact on the environment and society. In Deloitte’s 2023 Gen Z and Millennial Survey, for example, 39% of Gen Zs and 34% of Millennials said they had turned down employers that don’t align with their values.

For these socially conscious jobseekers and employees, the law profession’s track record of providing free legal advice to individuals, charities and community groups that might otherwise be unable to afford it is a major draw and something to shout about.

Just as important is the positive impact of pro bono work on society generally. The practice aligns with at least two of the United Nations’ Sustainable Development Goals (UN SDGs), namely Goal 10 (Reducing Inequalities) and Goal 16 (Peace, Justice and Strong Institutions). But through voluntary legal work, firms can support projects that advance all 17 of the UN SDGs.

An engaging ESG report can amplify these stories to establish strong bonds with a law firm’s local communities and make a solid case that its existence is literally pro bono publico – for the public good.


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