Environmental, social and governance issues remain a key focus for US companies, according to global law firm Morrison Foerster. However, shifts in public sentiment over the past two years have prompted organisations to adapt their approaches. This is according to the firm’s third survey of in-house counsel on organisational, individual, and departmental attitudes to ESG. The annual study measures shifts, values and best practices used by US corporations, governmental agencies and nonprofit organisations. This year, the survey asked senior in-house counsel how their organisations were balancing internal and external ESG mandates. Areas explored included leadership roles of organisational ESG initiatives, company and board leadership’s depth of focus on individual ESG components, legal department involvement in ESG strategy, and personal opinions and observations of ESG programmes. The findings revealed that ESG as a risk-assessment tool continued to be used beyond regulatory compliance, with more than half of respondents (52%) reporting that the subject had driven their organisation to alter strategic business decisions, compared with 37% last year. Motivations behind ESG adoption have also shifted, with a drop in public perception as a reason for adoption, and risk management and regulatory compliance now being stronger drivers. In addition, some organisations have scaled back voluntary disclosures due to potential negative publicity and unwanted government regulatory scrutiny. “Smart organisations are preparing beyond regulatory disclosure requirements and looking past the external ESG scrutiny to assess how their ESG programme can help with risk management, operational efficiencies, and shareholder value creation,” said Susan Mac Cormac, Global Co-chair of Morrison Foerster’s ESG, Sustainability and Social Enterprise, and Impact Investing practices. “As we see in the survey results, ESG is here to stay and the keys to success will be internal collaboration, good governance, and new technologies.” Increasingly, organisations are turning to c-suite leaders and chief compliance officers to lead their ESG programmes, the study also showed. Governance has grown in prominence among companies, with 61% above-average scores on the subject compared to 53% last year. In addition, priorities among individual components of ESG have shifted, with a decrease in priority for diversity, equity, and inclusion (DEI) and climate change issues, coupled with a rise in importance of community involvement, charitable giving and supply-chain management.
