Member Article

Governance + Compliance Magazine

Companies in the legal services industry may be advising clients on the risks and opportunities around corporate responsibility, but are they living up to those recommendations?

For more than a decade, corporate responsibility (CR) has been a key risk and opportunity for businesses. As a specialist regulatory lawyer at Shoosmiths, I deal with the risk element as my day job, advising clients on compliance with ESG legislation and guidance. As a firm, we also put CR at the heart of our business strategy. For us, it’s not just a ‘nice to have’, it’s a key opportunity for the business to differentiate itself. That’s the opportunity element.

So: is my firm practising what I preach to our clients? And can our approach translate into other sectors?

Environmental

The ‘environmental’ element of ESG covers myriad business activities and outputs. ESG can feel overwhelming, so it can be helpful to direct focus towards a manageable number of key areas. Those areas will be different for different businesses. One of our key priorities is decarbonising our business, because that’s where a service-based business like ours can make the biggest impact. The takeaway here is that there can be no one-size-fits-all programme for ESG.

Shoosmiths aims to become net zero across its entire value chain by 2040, with near-term and long-term science-based emissions reduction targets validated by the Science Based Targets initiative. The SBTi is a global body enabling businesses to set ambitious emissions reduction targets in line with the latest climate science. Taking part in established, large-scale, global, expert-led initiatives like this has several advantages, from helping to channel efforts into an initiative with a strong scientific grounding, to acting as a kitemark for businesses which are taking emissions reduction seriously.

Independent of our SBTi validated targets, we have set a target to achieve net zero for our operations in relation to scope 1 and 2 emissions by 2025. The firm continues to look at innovative ways to decarbonise, including the application of an internal carbon levy on every business flight, with these funds invested in carbon reduction projects. Every organisation’s journey to net zero will be unique.

Social

Our key social priorities include ensuring equitable opportunities for our people and creating a socially mobile world. We have several internal programmes designed to support diversity in our workforce, encompassing gender, race and ethnicity, LGBT+, disability and mental health. Such areas are where Shoosmiths can make the biggest impact.

Charitable donations can complement more direct CR action taken by the business. The Shoosmiths Foundation is a grant-making body which provides donations to UK registered charities whose missions match our ESG priorities. Applications are carefully evaluated and scrutinised before donations are awarded. For instance, last year we supported the JERICHO Foundation’s Jump Start initiative, supporting individuals’ work and life progression beyond JERICHO work placements. Businesses making charitable donations need to be confident that the recipient is aligned with the business’ strategy and demonstrating the impact of funding.

Governance

Shoosmiths has grown over recent years, and associated changes to our governance framework reflect that. Having the right structures in place is key to business success. Our takeaway is that the underlying framework should be reviewed regularly to ensure it remains fit for purpose.

In 2021, we introduced an elected shadow board, mirroring the structure of the senior management board. The shadow board’s remit is to review the same business topics as the board. This provides the main board with insight, feedback and ideas from a diverse cross-section of employees.

Challenges

Nicola Ellen, Shoosmiths’ Head of Corporate Responsibility, explains, ‘One of the biggest challenges for any business is being focused both on the here and now, as well as the interrelatedness of ESG issues, and horizon-gazing to prepare for the future.’

One of the ways we meet this challenge is by partnering with thought-leadership organisations. For instance, we are a UN Global Compact participant. As such, we benefit from access to a wealth of support resources, connectivity with other like-minded organisations and directional guidance on key ESG issues to help us determine our priorities.

What ESG success looks like

Success is about getting the foundations right. For us, that means accountability. Accountability is key to any business initiative. For ESG, success is measured in both financial and non-financial terms. At Shoosmiths, we have a dedicated Head of Corporate Responsibility. We also publish annual ESG reports and carbon-reduction plans on our website, so our internal and external stakeholders can see the progress we are making against our commitments – and hold us to account in achieving our targets.

Knowing that sustained traction for ESG initiatives can be difficult without stakeholder buy-in, we have board-level commitment to ESG considerations. We also encourage employees to lead on a variety of internal projects, such as pro bono clinics. The firm’s employee bonus scheme includes a People and Communities metric, which in year one tracked business travel as a contributor to our carbon footprint.

Nicola’s top tip for success is ‘staying focused on both your firm’s ultimate ESG vision and goals, but also the interim milestones, and therefore the detailed action plan required to enable you to monitor and celebrate success. Avoid complacency by recognising that the ESG landscape is ever changing, and stay focused on horizon-gazing to inform what will require attention and direction in the future and when.’

We have learnt that, while ESG issues change with time, the business imperative for a robust ESG strategy and evidence of progress is becoming ever more important. That key takeaway is valid for both legal and non-legal businesses, as much as for the clients we advise.

Joanne Sear, Principal Associate (Barrister), Shoosmiths

This article appeared in the March 2024 issue of Governance and Compliance