Why law firms are increasingly embracing ESG
13 Aug 2024
4 mins
When we think of ESG, a few types of organizations quickly come to mind: financial institutions required to disclose their investments in ESG-related initiatives, corporates navigating a more complex regulatory environment, fossil fuel companies fighting public backlash and struggling to appear more 'green.'
Law firms don’t necessarily make the initial cut in this ESG thought landscape—but they should. The legal ramifications of the rise of ESG have become a massive area of focus for all the above types of organizations—and for law firms themselves.
Globally, law firms are beginning to increase their ESG capabilities, both to help clients navigate the enormous complexity of ESG-related global regulations and to defend them against growing criticism and, indeed, litigation from activist investors, governments and regulators.
To succeed in an ESG-forward future, law firms will need develop the skills needed to advise clients across multiple complex global challenges, and they will also need to consider how their ESG-related matters affect their own reputations. To meet these needs, law firms will require the support of suppliers who understand both the challenges and opportunities inherent in this new environment, and who can support multilingual ESG communications for both corporate clients and law firms themselves.
Law firms will need to develop ESG advisory practices
One benefit of the growing focus on ESG across industries? The resulting need for legal advice from various organizations, corporations and government entities around the world. Law firms have a significant opportunity to capitalize on this need by providing advisory services to clients. Law firms will need to provide support to clients through an extensive knowledge of the regulatory frameworks underpinning ESG initiatives, an understanding of the nuances that exist among jurisdictions and an ability to help clients interpret and navigate their way around these frameworks. Often, that means law firms will need to understand and communicate in multiple locales and languages in order to be most effective.
Law firms will need to create ESG-related litigation practices
There has been—and will certainly continue to be—a growing movement around litigation aimed at organizations that are either not moving quickly enough on their ESG commitments or are not complying with those commitments at all. Indeed, over 2,000 new climate-related lawsuits were filed around the world in 2023, and a new category—called 'Transition Risk'—describes cases filed against corporates for their management of climate-related risks.
As activist investors, non-profit organizations (NPOs) and pressure groups focus their attention on corporates, they can create reputational challenges that organizations must hurdle. The good news for corporates is that law firms are ramping up their ESG practices so they can offer valuable counsel in this complex area.
Law firms will need to consider their own reputations when it comes to ESG
While law firms may spend the majority of their time and bandwidth considering how to counsel other organizations on their ESG initiatives, they would be remiss not to consider their own reputations—and contemplate how their choice of clientele might affect their perception in the wider world. Some of the best-known global firms have recently faced backlash for their contributing roles in pollution and carbonization; for instance, over the last five years, the top 100 firms in the world facilitated $2.8T in fossil fuel transactions.
Amid rebuke, that is beginning to change. According to the 2024 Law Firm Climate Change Scorecard, the world’s biggest firms have started to shift away from these types of transactions, and fossil fuel-related transactional work decreased 4% from 2019-2023 vs. 2018-2022. At the same time, there’s been a 20% increase in work related to renewable energy transactions—a $178B market value.
Today’s law firms will need to define their own missions and futures as it relates to ESG—and they’ll need to examine where they best stand to gain: ethically, reputationally, and financially.
Law firms need supportive, experienced allies for their ESG initiatives
Each ESG-related endeavor for law firms requires extensive knowledge, skills and expertise related both to the legal requirements and regulations and to the associated multilingual documentation and terminology. RWS has worked in the legal field for many years and has amassed extensive experience, understanding, and specialization when it comes to multilingual legal content. We’re particularly well-positioned to help legal clients navigate complex and growing ESG-related challenges.
Our industry-leading capability in supporting ESG communications across sectors, combined with our proven support for law firms across jurisdictions, enables us to support our clients in overcoming the challenges of ESG, reducing client risk, and capitalizing on the global opportunities for growth this complex and exciting new space offers.
Ready to learn more? Reach out to our team today.
David Hetling
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