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Client demand becomes major factor in ESG strategies at UK law firms

Natalie Runyon  Director / ESG content & Advisory Services / Thomson Reuters Institute

· 5 minute read

Natalie Runyon  Director / ESG content & Advisory Services / Thomson Reuters Institute

· 5 minute read

Law firms in the United Kingdom may be making more progress on incorporating ESG goals into their operations and client offerings than their US counterparts

The maturity of environmental, social & governance (ESG) strategies among law firms in the United Kingdom is impressive, based on interviews with four executive leaders responsible for ESG strategies at the law firms Weightmans, Irwin Mitchell, Simmons & Simmons, and CMS.

Indeed, compared to the level of sophistication of ESG strategies at law firms in the United States, law firms here apparently could learn a lot from their U.K. peers.

Common elements of ESG strategies

All ESG strategists from U.K. law firms who were interviewed said they had been investing in the key components of ESG even before it was a mainstream topic and continue to focus on key areas of overlap today. These key areas include:

Conducting materiality assessments — Most had conducted formal materiality assessments with a cross-section of stakeholders, even though there were variations in the scope of each assessment. All the firms sought the input of their employees, suppliers, and clients. However, Simmons & Simmons expanded its approach by interviewing regulators, alumni, and trainee employees, as well.

Ensuring consistency in stakeholder groups and material issues — At a high level, there was regularity in major groups of stakeholders. Although the majority of the stakeholders and the material issues they cited were largely the same, the feedback from stakeholders instigated various prioritization of issues within the environmental and social aspects of ESG. The priority of other items — such as business integrity, ethics, data security, privacy, and cybersecurity — were largely the same across all the law firms.

Further, talent attraction & retention and the health & well-being of staff emerged as the key issues within the social sphere across all stakeholders. “The clients would say to me, if you get that wrong, you can’t serve us as your client as well because you’ll have not the right talent, you will not have the most motivated or engaged workforce and so on,” says Sophia Adams Bhatti, Global Head of Purpose and Impact for Simmons & Simmons.

On the other hand, CMS’s assessment of material issues revealed carbon emissions and biodiversity as key issues within the environmental area, and pro bono work and volunteering as important social concerns.

Creating full-time ESG roles — Most law firms had a created a full-time role to head up their ESG strategy sometime in the last two years. Weightmans, Irwin Mitchell, and Simmons & Simmons hired ESG leads in 2022, including Abhay Srivastava, ESG Manager at Weightmans, and Adams Bhatti at Simmons & Simmons.

Participating in external organizations — Partnerships with external organizations was another common tactic across all the firms’ ESG strategies. All four firms have signed up to the United Nations’ Global Compact. In addition, Weightmans and Simmons & Simmons participate in the Legal Sustainability Alliance and Greener Litigation Pledge. And Simmons & Simmons was a founding signatory of the litigation pledge and a founding signatory to the 1.5 Degree Charter Group.

Remaining points of differentiation

Even with many common elements among U.K. law firms, there was also quite a bit of differentiation. One of them was the main drivers of the ESG strategy. For example, Weightmans was more operationally driven with ISO pursuits for both environmental and energy management more than five years ago. Due in large part to its operational focus, the firm ranked in the 93rd percentile for U.K.-based law firms and professional services firms that have participated in the ECOVADIS assessment, according to Weightmans’ Srivastava.

“External accreditations on ESG or Sustainability provide positive assurance to the stakeholders like our employees, the board of directors, and to the firm’s clients,” Srivastava says. “The external assessments also help us benchmark our ESG performance in the legal industry.”

Simmons & Simmons sought to establish its purpose and impact through key clients and its supply chain from the very beginning of the formalization of the firm’s ESG strategy. Indeed, one of the core elements of Adams Bhatti’s role is to help the firm on its journey to understand its purpose as a law firm and what its role is for the larger society and planet.

Client prioritization through procurement

All of the firms observed the growing interest in ESG from clients, particularly through the procurement process. For example, interest in firms’ ESG strategies from large multinational public companies is growing, according to Barbara Mendler, Chief Operating Officer for the U.K., Central and Easter Europe, the Middle East & Asia for CMS. She adds that the questionnaires from companies asking about the firm’s ESG strategy represents 20% of the firm’s revenue.

It is also multiplying within the U.K. public sector, with the weighting of ESG in procurement for public sector clients climbing to 20% currently from 5% just three to five years ago, according to Srivastava.

In addition, smaller private enterprises are engaging around ESG issues as part of the mutual learning process, according to Victoria Brackett, Group Chief Commercial Officer at Irvin Mitchell, because “their employees at these organizations want to know that their suppliers are ethical businesses and are behaving responsibly in relation to the world.”

In its consumer work, Irwin Mitchell also sees interest in ESG expanding. “We do net promoter scores, and we do Google reviews,” Brackett adds. “This commentary shows that they [consumers] like the fact that we’re a responsible business.”

Client demands from law firms in regard to their ESG strategies is not going away any time soon. At some point, clients will make business decisions based on the firms’ demonstration of meaningful progress in their ESG goals. In fact, Mendler expects this attitude to emerge as the norm in the firm’s relationship with its suppliers.

“We expect in the future to start working with suppliers to achieve the strategies that are deemed critical to drive impact,” she explains.