Posted on June 30, 2021 by Heidi B. (Goldstein) Friedman
Picture the marquee surrounded by bright flashing lights as the Environmental, Social, and Governance (“ESG”) mandates, requirements and best practices are about to take center stage. While the “S” and “G” are critical for overall performance, I would argue that the “E” is the star of the show, and it will determine the quality of the reviews. As environmental lawyers, this is our opportunity to work together to assist with driving ESG change so all organizations can maximize their ESG performance and partner with the relevant agencies (national, state and local) to make an impact toward a sustainable future. While the ESG show was launched by investors, all stakeholders are demanding progress in this space. It is no longer an option to merely provide lip service to environmental advancements as board members; customers, workers and communities also require action. As public companies await the SEC’s regulation dictating what the “G” will mean, private companies and non-profits are also following suit as their stakeholders are confirming that these mandates will transcend the public company forum.
Our role here is not just a legal one, but rather as a strategic, trusted advisor and a reality check as the ESG goals and objectives are defined. It is a clear opportunity for the “Es” to spend a lot more time with the “S” and the “G” folks. Environmental counsel must be strategic and look at holistic risk and opportunity rather than just interpret existing regulations relating to the Clean Air Act or RCRA. Now that the “E” has a seat at the table, it is time to look at everything from organizations’ materiality assessment to the level of transparency in its public facing disclosures. On the back end, providing input into what is material to the organization is essential, not only because certain regulations may apply, but also because it allows counsel to identify issues that may become material in the future. Do not be fooled that ESG is all new – it is not. Instead, it is evolving with the same foundation of environmental counsel we have all been working on for years. We will see new laws and regulations emerge, but we already have the skill set to understand the connection between these environmental goals, social issues and external communications and compliance.
It is time for us to start asking some questions that can help drive change in a more direct and sustainable manner. Are the identified environmental objectives reasonable and achievable? What metrics are being used to track advancement toward these goals? One of my favorite quotes is, “If you do not track it, you do not treasure it.” It’s our job to support an assessment of these challenging questions while requiring data collection and compliance change. It is easy, for example, to set goals for net zero emissions by certain dates, but are those emission reductions related to products or factories or both? Have energy efficiency audits been considered? What is the status of evaluating the full life cycle of all products from cradle to grave with an increased focus on recyclable materials? As new facilities are built or lines expanded, is the GHG emission and climate change impact considered up-front? How about as new products are developed in the R&D stage? Then, there is the intersection with environmental justice, where agencies and companies can partner to make sure that community stakeholders are prioritized and, most importantly, communication with these stakeholders becomes proactive so that communities can be a partner to these goals rather than having to challenge them.
These are tough questions that demand even tougher answers, but our decades of experience as environmental counsel provide the necessary resources to make sure the answers are formulated with an eye toward mitigating overall risk and achieving reasonable milestones. This is not going to be a short running show either. ESG will be center stage for many years, with more regulations and requirements coming our way to interpret and support. So, your big moment is here, my fellow environment lawyers, and the curtain is rising. We’re excited to see everyone shine!