Mid-Year 2022 Performance Review: Where Top Law Firms Stand on ESG
To follow-up on last week's post naming the 'Lucky Number 7' of top law firms leading the pack on ESG and sustainability performance in the legal space (Clifford Chance, DLA Piper, Linklaters, Baker McKenzie, DWF, Burges Salmon and Freshfields), this post outlines impactvise's high level Mid-2022 Performance Review, or the areas where these firms are either exceeding or meeting expectations, and where there is room for improvement.
Across the board, the best performing firms are scoring well in the following areas: Health and Safety Here, we define “Health & Safety” as publishing clear explanations of how an organization facilitates workers’ access to non-occupational medical and healthcare services, and the scope of access provided for employees and workers. Mental well-being is also addressed, in the form of delineating services provided for the mental well-being of employees, overall awareness of concepts of resilience, and well-being support. The top 7 firms all include distinct references to various internal initiatives for their employees.
Greenhouse gas reduction The majority of the top 7 firms clearly report on their organisation’s emissions for relevant greenhouse gases (e.g. carbon dioxide, methane, nitrous oxide, F-gases etc.) - most especially, the metric tonnes of carbon dioxide equivalent (tCO2e) for GHG Protocol Scope 1 and Scope 2 emissions. Further, leading firms estimate and report material upstream and downstream (GHG Protocol Scope 3) emissions where appropriate.
Protected ethics (“whistleblowing”) Leading firms publish explicit descriptions of internal and external mechanisms/processes for:
Seeking advice about ethical and lawful behaviour and organizational integrity; and
Reporting concerns about unethical or unlawful behaviour and lack of organisational integrity.
For a few areas, the top performing law firms displayed results in line with trends in the legal sector, including:
Diversity and inclusion (D&I) D&I remains a core effort in the legal industry, with ongoing pressure from both clients and potential employees/within the realm of talent recruitment. The efforts of the best performing firms include clearcut policies, tailored programmes and firm-wide education efforts to increase shared knowledge and bolster efforts. Yet, in order to make real progress, firms must set out hard, specific targets for D&I so that efforts and results are measurable.
In this context, land use reflects evolving standards for environmentally-responsible building design. With a growing green building industry, newly published studies, better access to renewable energy sources, and better building materials, law firms are starting to reflect these considerations in the design process for fitting out new office space, or when office space is refurbished. Factors include using materials made from recycled components, re-using existing materials, minimising waste, installing LED lights, motion detectors and purchasing furniture with good environmental certifications and low chemical paints.
Room for Improvement
A few notable discrepancies/divergences from “best practice” include:
Only three out of these top seven firms publicly state their purpose - the “why” the law firm exists. A core principle of the WEF Stakeholder Capitalism metrics, purpose setting is the step beyond the goal to “serve our clients with the highest quality legal advice” (or the “what” the firm does); it is a bold definition of a firm’s “True North.” Ideally, every employee should understand and live up to the set purpose and values. When clearly defined, many other decisions can be tied back to the True North - and impactvise sees this as a foundational element of a firm's ESG strategy.
Given the centrality of remuneration to a law firm’s culture, you as an employee or client expect to have this system described transparently. This clarity is not strictly about how much money is earned, but more so about the bigger picture of how these firms make, share, and distribute revenue and profit. Not one of the top performing law firms describe their system in a way that clearly outlines how this is done.
While five of the seven performers score relatively highly regarding disclosures of their firm's own governance, the vast majority of our database’s firms still lack transparency on how the law firm is governed and managed. For instance, who takes what decisions at what levels, or the policies structuring client engagement/representation or internal conflicts of interest, are rarely described.
Up next: In our next final post for the Mid-2022 review/Lucky Number 7 Firms, we'll outline next steps that we suggest law firms - no matter where they rank - take to progress their sustainability-centric journeys.