April 12, 2022
By Bernadette BulacanPage Reading Time: 4 minutes
In recent years, environmental, social and governance (ESG) initiatives have become strategic imperatives for companies as they seek to build trust with employees, partners, and customers. ESG builds brand loyalty, gives a competitive advantage in the marketplace, and attracts and retains talent within an organization. A study by Unilever found that a third of all global consumers choose to buy from brands because of their ESG commitments. Accordingly, across enterprises, all departments are exploring how to best match their respective programs to support ESG initiatives.
The legal department is often associated with enterprise-wide ESG discussions on account of the General Counsel’s role in providing advice and guidance regarding these efforts. However, beyond providing ESG legal and regulatory counsel to the enterprise, GCs must also consider how the legal department can adopt practices that align with these ESG goals. More and more GCs are turning to their Legal Department Operations practitioners (LDOs), who will play a critical role in operationalizing ESG initiatives within the Legal department.
In a recent conversation I hosted with a diverse group of legal operations leaders, it was clear that LDOs are already putting a lot of thought into how the legal department can build programs to align themselves with these ESG initiatives. Here are just a few ideas that LDOs might consider deploying within their own departments that surfaced in that earlier conversation:
While each industry’s operations carry different environmental impacts, every company (and legal department) would do well to consider how they can make their operations greener.
Reducing waste and consumption are obvious first steps. Some LDOs have implemented some easy wins like policies that ban disposable coffee cups or issuing reusable water bottles to all legal department employees to reduce reliance on single use plastic bottles.
Other departments are going paperless, which is especially impactful when you consider that approximately 1 billion trees worth of paper are thrown away each year in the United States. Accordingly, many LDOs are reviewing manual, paper-based processes and moving to digital contract management. When contracts are managed digitally, it means no more printing out 70-page contracts to do redlines or to gather wet signatures. It’s staggering how much paper can be saved thanks to a digital document workflow.
In addition to investigating the impact of going paperless, LDOs are looking at the environmental impact of legal department travel. The pandemic has proven that many of the meetings we thought had to happen in person—like in-person negotiations of a contract–can in fact be done virtually. LDOs should consider whether they can continue some of these practices post-pandemic—not to prevent the spread of COVID, but to keep carbon out of the atmosphere.
Finally, legal teams are looking beyond contract processes and looking at the substance within the contracts. As LDOs help build templates and make them accessible to the legal department, they might consider creating and deploying standard contract clauses and contract playbooks that address environmental sustainability. Making such clauses available is a unique way for legal departments to contribute to an enterprise’s environmental goals.
The “S” in ESG asks companies to think holistically about all their stakeholders—employees, suppliers, customers, shareholders, and the communities that companies work in—and explore how the company might help close the opportunity gap that has historically existed in these populations.
To be part of the solution, LDOs should consider the legal department’s hiring practices. Reversing historical bias in hiring within the legal department is one way an LDO can make a meaningful contribution to its organization’s social goals. The CLOC competency model identifies Training & Development as a core skill; LDOs can leverage this competency to create professional development opportunities around unconscious bias training for all members of the legal department. This review of hiring practices should extend to all roles in the legal department, from in-house counsel, allied legal professionals and members of the legal department operations team.
Alignment with these social goals can also come from how legal teams hire outside counsel. Firm & Vendor Management (also a CLOC Core 12 competency) can provide guidance as the legal department engages and hires law firms with track records of diverse hiring and promotion.
Finally, LDOs can play a big role in ensuring the legal team and the company as a whole are operating legally and ethically.
Top governance concerns for today’s enterprises include issues around bribery, money laundering, cyber-security, and data privacy. While GCs will play a central role in setting the company’s direction around these laws and regulations, LDOs can assist on this front by identifying technology available to the legal department to enable appropriate governance and compliance.
For instance, LDOs can make sure that all governance policies are easily accessible in a single, shared location (like SharePoint) and simple to read and understand. Transparency and accessibility are key to good governance; accordingly, LDOs can champion the avoidance of legalese and search out opportunities to more clearly explain the rules—so people can follow them.
LDOs can take a more ambitious step by identifying technology that can assist in an audit of third-party agreements to ensure partners are obliged to follow company guidance on questions of governance. Contract management software can assist in centralizing all contract data in a single location, and AI trained to detect obligation language can automate discovery to turn up gaps in compliance. With past contracts analyzed, LDOs can then turn their attention to future contracts by setting up rules to ensure all relevant regulatory clauses—from privacy to anti-corruption and beyond—are appropriately included in every executed contract.
Legal is a critical voice in the organization urging management to look beyond quarterly earnings to understand how a company’s behavior impacts its long-term viability and reputation. With the help of LDOs, legal departments can help operationalize these enterprise-wide ESG initiatives through new programs and technology. This is a golden opportunity for legal teams, and especially LDOs, to step up and lead like the world depends on it.