In the last five years, many law firms created ESG practices to help clients navigate the vast world of ESG issues. Despite advising clients on ESG best practices, it seems that many firms are taking a “do as I say not as I do” approach. Recent data from Lamp House Strategy’s Second Annual Report show law firms in the US and UK lagging on a variety of ESG issues from climate programs to human capital management. The report identifies multiple areas where law firms stand to improve their ESG performance. Some key data points include:
- “8% [of firms] conduct employee well-being surveys (on an annual basis at least)
- 7% have specific strategies to reduce burnout (e.g. monitoring workloads, implementing a working practices code, providing billable credit for wellbeing or vacation time)
- 1% have practice/department KPIs linked to mental health and wellbeing set public targets for improving employee wellbeing across all roles
- <1% set public targets for improving employee wellbeing across all roles”
The report also identifies several ways that law firms are failing to implement good governance systems for managing ESG issues:
- “97% [of firms] do not disclose whether they have a matter take-on policy/business acceptance criteria in place which considers responsible business factors
- 93% have not conducted a materiality assessment with key stakeholders in the last three years
- 92% do not have a risk register/monitoring tool which considers environmental and/or social risks
- 83% do not have a dedicated head of responsible business (though UK firms are more likely to have one)
- 77% do not set any targets around total pro bono hours across the firm (though US firms are more likely to have a target)”
This data is discouraging and shows great room for improvement for ESG at law firms. Lawyers often think of themselves as leaders in the ESG space, but thought leadership and sharing best practices with clients isn’t enough. To be leaders, we should work harder to lead by example. And don’t forget – legal services are themselves a part of company supply chains. Clients and other stakeholders may come looking for ESG data and achievements soon – when they do, law firms will want to show programs, performance and controls for ESG.
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