Globalization and digital transformation have resulted in rapid changes and growing challenges, prompting organizations to reconsider traditional models. Economic progress now encompasses legal, economic, and social dimensions, leading to new tensions and discrepancies between corporate values and daily operations.
The concept of sustainability is becoming increasingly prominent, linked to three main aspects: the environment, economic change, and social consequences. It is essential that progress does not harm our planet or our principles, but rather aligns business objectives with the well-being of society as a whole.
The idea of meeting present needs without harming future generations, first introduced in the report Our Common Future, has evolved to emphasize that sustainability is a responsibility shared by all of society, not just the government.
The text emphasizes the significant contribution of the private sector to this initiative, underscoring its dedication to sustainability for the planet, society, and businesses. This commitment is seen as crucial not just due to societal and regulatory demands but also as a key aspect of corporate responsibility, offering various competitive advantages.
In the business world, there is a growing focus on factors beyond financial matters that also influence a company’s sustainability. While maintaining a company and sustaining a society have clear differences in motivations and goals, the challenge is to find ways for these two realms to integrate effectively.
Companies are motivated by profit and growth, while society is influenced by collective needs and cultural values. Despite appearing distinct, they are closely connected.
It is crucial for companies to show that they can achieve their financial objectives while also contributing to sustainable development. Balancing corporate goals with social responsibility is not just a goal but a requirement in today’s world.
Companies can shape their legacy by integrating sustainable practices, prioritizing community well-being, and acknowledging their role in the global ecosystem in the digital age.
Corporations are incorporating Environmental, Social & Corporate Governance (ESG) actions into their practices in response to new social demands, which are related to their activities and non-financial aspects.
Environmental concerns were initially the main focus, but in recent years, other aspects such as diversity and governance have gained equal importance. The letter “S” represents diversity, while the letter “G” signifies governance, highlighting the significance of organization, strategy definition, and documentation in implementing these initiatives.
The rise in awareness of environmental, social, and governance concerns has made transparency in business operations crucial. Frameworks like the Global Reporting Initiative (GRI) and the International Integrated Reporting Committee (IIRC) have been developed to enhance reporting practices. The GRI seeks to bring the same level of detail found in financial reports to non-financial reports, while the IIRC aims to set global guidelines for integrating financial, economic, environmental, and social data into one corporate report.
These tools enhance awareness of sustainability effects and engage various stakeholders, promoting swift adjustments in business practices and underlining the importance of partnering with suppliers who uphold similar values and standards.
How can you track business activity signals?
There are numerous difficulties in managing and overseeing the execution of plans and indicators outlined in reports. Technology plays a crucial role in digitizing activities, responses, and data, enabling team collaboration and project governance. Thomson Reuters’ HighQ4 platform exemplifies how projects can be implemented effectively with the essential elements for accountability and agenda management.
Choosing ESG-aligned practices has shown companies a wide range of advantages, making financial performance just one aspect of corporate success. Today, a company’s value is also determined by its sustainable and responsible operations.
Corporate sustainability is no longer just a trend but a necessity for companies aiming to succeed and have a positive impact in today’s world. Demonstrating actions taken is becoming increasingly crucial in a world where many make promises but few follow through.
Other sectors of businesses play a crucial role in shaping the direction by recognizing risks and opportunities and integrating these practices and institutional values across different departments within each organization.
Companies are now focusing on building strong relationships with employees, customers, suppliers, and communities to ensure mutual benefit and business success, a concept known as “stakeholder capitalism.” This approach helps companies minimize operational risk and enhance the quality of their offerings.
Legal plays a crucial role in supporting and integrating different stakeholders in two main dimensions.
Legal assistance is provided for organizations to define and establish their ESG strategies.
The legal department or law firm must organize itself to follow this agenda, establish sustainability indicators, and publicly share its progress and accomplishments in this area.
In recent years, there has been a shift in the legal field from focusing on costs and issues to taking a strategic approach in business, further solidifying this shift.
The legal perspective in supporting ESG strategies within organizations, whether through internal legal departments or with the assistance of law firms, aids in establishing and reviewing governance rules across sectors, standardizing strategies, conducting assessments and ensuring compliance, managing third-party relationships, and supporting departmental activities in different projects.
- Environment.
- Carbon offsetting;
- Human rights are fundamental.
- Finance that is environmentally friendly and promotes long-term sustainability.
- Data security;
- Responsible utilization of artificial intelligence.
- Diversity initiatives.
Legal activities are enhanced by the use of other technologies to analyze data effectively and make informed decisions, leading to more successful outcomes. For instance, in the workplace, analyzing judicial process data can help pinpoint company issues and facilitate preventive measures, operational adjustments, and improved employee relations. This integrated approach with the HR department fosters a better work environment and addresses employee needs more effectively.
Some law firms have developed their own ESG agenda and released sustainability reports.
The Abreu Advogados office in Portugal stands out globally for its sustainability efforts and collaboration with the New School of Law to establish the “Abreu Chair in ESG impact,” earning the office recognition at the Financial Times Innovative Lawyers Awards Europe 2023.
Lee, Brock, Camargo Advogados in Brazil has been publishing its sustainability report for two years, highlighting its diverse workforce and commitment to social and environmental initiatives.
Law firms and legal departments have significant opportunities to assist companies in developing and strengthening their ESG strategies within the sustainability context. Recognizing their impact, these firms should also take on the responsibility of creating sustainability reports to showcase their dedication to sustainable practices and inspire others in the field.
By prioritizing ESG practices, law firms and legal departments enhance their image as ethical leaders and increase their importance in a business environment that values sustainability. Advocacy today involves not only delivering high-quality legal services but also setting an example and guiding towards a more accountable and sustainable corporate future.
Alexandre Zavaglia Coelho works as a trend consultant at Thomson Reuters and is a leading figure in incorporating artificial intelligence into legal practices and projects focusing on AI ethics.
Sources cited
Published in 1987, the Brundtland Report was released by the UN World Commission on Environment and Development.
Created in 1997 by the Coalition for Environmentally Responsible Economics (CERES) and the United Nations Environment Programme (UNDP).
IIRC_QA.pdf can be found at the following link: https://www.unepfi.org/fileadmin/investment/IIRC_QA.pdf
The website link provided is related to an ESG management platform on Thomson Reuters Marketplace.
ESG, the abbreviation that has come to represent sustainability, is a widely recognized term.
Some offices have established specialized services to assist companies with this initiative, such as Mattos Filho, Pinheiro Neto, Tench, Rossi, Watanabe, and TozziniFreire.
Abreu Advogados receives the Innovation in Skills Development award at the FT Innovative Lawyers Awards Europe 2023 and is acknowledged as one of the most innovative firms.
https://lbca.com.br/reporto-esg-2022/