Lawyers Lagging on ESG Issues

Lawyers Lagging on ESG Issues

A recent report released by IR Magazine has found that a percent of executives operating in the European bureaucratic sphere commented that their respective business group of directors connected their decision on pay provided to the higher levels of their commercial organizations to Environmental, Social, and Governance issues. Arguably the most eye-catching statistic from the survey was that in less than fifty percent of survey respondents appeared to be of the view that matters impacting the planet were important.

Sample Size? 

As everyone in the population is aware a survey is only as credible as the size of the sample approached for information and this particular survey was no exception as the organizers approached just over one hundred and fifty interviewees all of whom were in legal counsel and corporate administrative roles within a mixture of in-house and external legal departments.

Our Survey Said… 

The headline figure of the report revealed that significantly fewer businesses operating on the North American continent and making the connection between the pay provided to the organizations to their positions on the current hot topic of Environmental Social and Governance. This was in comparison to their rival businesses in similar commercial markets.

The Report was also an interesting Empirical study as it highlighted the comparison between the position in the United States of America and their supposed European counterparts. From an American perspective, the report found that just short of a percent of those who answered the interviewer’s questions claimed that their directors directly link corporate pay to the business performance on Environmental, Social, and Governance. The report was eye-opening, to say the least, because this figure of forty percent contrasts starkly and dwarfs the percentage reported from Europe, where the continent published a figure of sixty percentage points.

There were some alarming statistics revealed by the survey including but not limited to the following:

  • just under seventy-five of those who were approached for their view on this issue answered affirmatively that they directly connected corporate compensation to the issue of Environmental, Social, and Governance
  • the majority of this group cited environmental issues such as: 
  • animal and plant life diversity in a specific environment
  • transformations taking place to the condition of the planet
  • the preservation of natural resources such as water and
  • the prevention and mitigation against the effects of contamination

Track the Trend

The recent report highlighted the sentiment amongst those at the forefront of the industry. The main trend appears to have been an increasing volume of those responsible for investing in affected organizations who are eager to narrow the somewhat wide disparity between pay provided to leading decision makers within the industry and the Environmental, Social, and Governance agenda. Many of those influential corporate persons putting forward answers to the investigators disclosed that they aspired to see Environmental, Social and Governance used as a tool to encourage those occupying upper management of these commercial organizations to strive to achieve objectives including but not limited to:

  • limiting, lowering, and driving down the volumes of output from a greenhouse gas perspective
  • furthering equality, divergence, and distinctiveness at all levels of both the organization and the wider sector operated in
  • expecting the groundwork implemented in the previous two points to increase their output from a financial standpoint and 
  • they also want to mitigate the numerous amount of risks that can present themselves in businesses from time to time.

In-house and external legal departments need to be pouring over the results of this survey to guide the future direction of the organizations they are involved with. 

ASSESSING FIRMS

#LeighDay #IrwinMitchell #PenningtonManchesCooper #SimpsonMillarLLP #SlaterandGordon #ThompsonsSolicitorsLLP #BindmansLLP #CurzonGreenSolicitors #didlw #HodgeJones&Allen #RahmanLoweSolicitors

SOURCES USED WHEN WRITING THIS ARTICLE

]SOURCE 1] Corporate secretary – Executive Compensation: Insight on companies’ governance - Executive Compensation: Insight on companies’ governance (irmagazine.com)

[SOURCE 2] Maiden, Ben – Apple set to face proposals on apps and forced labor – 06 January 2022 - Apple set to face proposals on apps and forced labor | Corporate Secretary

[SOUCE 3] Corporate secretary – Executive Compensation: Insight on companies’ governance – 30 June 2022 - Executive Compensation: Insight on companies’ governance | Corporate Secretary

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