1. Introduction: The evolution of good business
Few would contest that the pursuit of profit is fundamental to good business strategy. Yet there is growing recognition in the corporate world that not all profits are equal. Can the pursuit of short-term returns limit the potential for long-term growth in an industry? Do they come at a social or environmental cost that customers, investors and society are no longer willing to pay? These are the questions ‘sustainability’ asks of today’s organisation. As organisations engage with such questions, many are finding a route to competitive advantage – increasing efficiencies, strengthening resilience, attracting investment, retaining talent, fostering innovation and gaining trust. Far from a peripheral corporate tag-on, sustainability is increasingly relevant as a core factor in strategic management and informed decision making. In this light, sustainable business = good business.[Sustainability] informs everything we do, not just from a moral perspective but from a sound business perspective.” General counsel, renewable energy company We don’t differentiate between sustainable business practice and normal business practice.” Senior in-house lawyer We’re no longer just an energy supply company, we’re also an energy services company… this has been about making our business sustainable in an area where energy consumption is reducing.” Legal director, major energy and utilities supplier Sustainability for us is key in that we rely on funders to provide us with money that we then lend on. Over the last six years we’ve seen the impact on funders of non-sustainable funding models and their willingness or ability to withdraw funding very quickly. So for us to have a long-term business, we need to have a sustainable business model that has the trust and confidence of our funders – this is key to our success.” Legal and compliance director, financial services company Which of the following best characterises the prevailing attitude towards sustainable business within the culture of your organisation? Superficial – a peripheral, box-ticking exercise that does not deliver any significant value to the business Important – an accepted part of the business practice that delivers some degree of value to the business Integral – a core driver in how business is done that delivers significant value to the business Not sure/No answer 9.8% 52.9% 21.6% 14.7% snapshot 9.8% 52.9% 21.6% 14.7% Beyond Responsibility May 2014 42. What is driving sustainable business? The rise of sustainability up the corporate agenda can be attributed to a wide array of factors. From stringent regulation and public scrutiny, to visionary leadership and customer preference, both carrot and stick have played a part in turning knowledge into action. The biggest shift in momentum over the next five years is expected, by the in-house legal community, to come from market forces. Although the legal landscape is expected to continue driving business practices, a greater impetus around stakeholder dynamics, customer demand and competitive advantage will only further embed sustainability as a key strategic issue for organisations.Which two factors have had the most influence in your organisation’s sustainability agenda to date? Which two do you expect will have the strongest influence over the next five years? Overall, what level of impact have the various drivers of sustainability had on the way your business operates? Major impact 12% Measurable impact 59% Little impact 12% No impact 6% Not sure 6% No answer 5% 12% 59% 12% 6% 6% 5% There are situations where simply complying with the law is not enough… so you do have to go beyond it for sustainability. For example, reducing your carbon footprint - in many situations there’s no legal obligation to do that… but we take a view that it is part of our sustainability agenda so we’ll go far beyond what the law requires.” General counsel, logistics company Changes in legislation and regulation Market pressures (such as customer demand and competitive advantage) Pressure from key stakeholder groups Internal input from staff Other (including strong senior leadership, scientific knowledge and established corporate strategies/programmes) To date 53% 45% 20% 24% 51% 72% 33% 14% 6% 12% Next 5 years snapshot snapshot Beyond Responsibility May 2014 6Most major energy companies have a clear stance on environmental compliance through sustainability policies, contracting documents, and procurement scoring. This is a strong driver… for us as a contractor ...being ahead of the game and being able to gain preference as a supplier to customers on the basis of supply chain sustainability.” General counsel, utilities company I very much doubt if quoted companies would do anything without a good business case for it – otherwise you’re wasting shareholders’ money… Our business is subject to pressure from shareholders who in turn are under pressure to invest in sustainable businesses.” General counsel, utilities company [We are] being valued and closely scrutinised on the basis of environmental performance. Internally, one of the key messages is that we can’t afford to have an incident like Deepwater Horizon - therefore prevention is the answer”. Senior legal counsel, upstream oil and gas company 7 Beyond Responsibility May 2014Viewpoint: Forum for the Future Forum for the Future works globally with organisations to solve complex sustainability challenges. David Bent, Director of Sustainable Business, and Giles Bristow, Director of Programmes, outline why organisations need lawyers to engage with sustainability. The companies we work with tell us that sustainability issues are shaping their operating context. The specific symptoms vary by industry. In manufacturing it might be the rising cost of energy and raw materials. In fast moving consumer goods it might be getting formal and informal licence to grow in an emerging market. In investment it is the fear of ‘stranded assets’, suddenly worthless because other investors realise it has no future. In food the fear is that current agricultural production will be stretched beyond breaking point. Behind the dizzying variety is a simple root cause: our global economy is unsustainable. We have more people, more prosperous in more places than ever before. By 2050 there will be about 9 billion people in the world – a trebling in about 100 years. For the first time in history more than half of people in the world live in cities. Since the start of this century commodity prices have doubled because demand is exceeding ability to supply. We will need to grow as much food in the next 40 years as was grown in the last 8,000. The exponential growth of people, economy and everything else are increasing the demands we place on nature, and on society – and undermining the ability of both to supply what we need. For the companies we work with there are a number of legal dimensions. At the most banal, there is a lack of understanding within a company that can hold-up action. In the past sustainability-related decisions were smaller and simpler, so the relevant people have had fewer hoops to jump through. They were struggling with how to engage their legal departments properly. Conversely, the legal team don’t always understand the issues and find it easier to just say “no”. Then there are more fundamental problems. Let’s take just three. 1 ‘A legal framework for the integration of environmental, social and governance issues into institutional investment’, Freshfields Bruckhaus Deringer on behalf of the UNEP Finance Initiative, October 2005. First, it seems many investors and directors believe that fiduciary duty requires maximising shareholder value and so act against sustainability. This is despite an authoritative legal report to the UNEP Finance Initiative 1 concluding that “…integrating [sustainability] considerations into an investment analysis so as to more reliably predict financial performance is clearly permissible and is arguably required in all jurisdictions”. Second, shaping a company’s operating environment often has to be in collaboration with other companies, including most obviously, competitors. Companies we work with often fear being accused of forming a cartel and struggle to get over the competition law objections with their in-house counsel. Third, many companies realise that the biggest impacts of their business are not in their own operations but upstream in the supply-chain or downstream in use and disposal. We know companies who have held back from acting because they fear they will create expectations of legal responsibility. If we imagine ten years in the future, in a global world that is on a more sustainable track, how might we have got there? We will need action from companies, who have the enlightened self-interest to see that a dynamic, sustainable future is one that benefits them and their shareholders. We will need individual business functions, and the different professions, to be enablers, using their insight to make the company the best it can be. We will need laws, government policy and regulations to be framed so we can have competitive markets that drive the positive outcomes. Therefore, we need legal counsel, and the legal profession, to engage and act. Businesses need their analysis and acumen, so those companies can succeed through sustainability. Beyond Responsibility May 2014 83. How is sustainable business impacting general counsel and legal teams? Sustainability plays out in different areas for different organisations. For some, the focus may be on corporate governance and resource security in the supply chain. For others it may be service or product innovation to meet future customer needs. For others still it may be ensuring a resilient, skilled and motivated workforce in the face of changing social norms. All these endeavours – whether or not they are recognised explicitly as ‘sustainability’ – often have significant legal dimensions. Through ad-hoc advice, risk management roles, and sometimes formalised programme remits, corporate sustainability is impacting the work of many in-house teams in some way, shape or form.snapshot Which three aspects of business best represent your organisation’s priorities in addressing sustainability issues? Energy and resource management Supply chain Regulatory compliance Product development Corporate governance and risk management Finance and investment Workforce Technology and innovation Not sure Other/none of the above 53% 45% 41% 34% 20% 28% 18% 10% 8% 6% My challenge is addressing sustainability in the context of such an immense supply chain and corporate footprint, from all sorts of directions, particularly from a reputational angle when it comes to questions about sweat shops and third party labour practices.” Head of legal, retail company It’s even part of our objectives nowadays so we’re measured on it.” General counsel, utilities company Beyond Responsibility May 2014 10snapshot In what ways has the sustainable business agenda of your company impacted your role and/or the work of the legal team? 35% 33% 28% 27% 6% Legal advice/intervention has been required directly relating to sustainability projects and initiatives by the business 35% Formal changes to roles and responsibilities to incorporate matters of sustainability, CR and ethics. 33% Requirement to factor sustainability goals or values into legal advice (i.e. a mind-set that is more long-term, socially or environmentally responsible, etc.) 28% There has been no discernible impact 27% Other 6% You can no longer make the assumption that if you behave within the law then that’s enough” Head of legal, retail company I’m currently revising supplier due diligence to be more careful about who we’re doing business with.” General counsel, pharmaceuticals company The market is changing and collaboration – even with competitors – is now much more prevalent, and if everyone is thinking along the same lines then this will over time see the market change further… Even five years ago things looked quite different. This is how we’re having to adapt to the market as it changes.” Legal counsel, energy and utilities company 11 Beyond Responsibility May 2014Beyond Responsibility May 2014 12Viewpoint: Robert Ivens, Head of Legal, Marks & Spencer Robert Ivens leads the legal team at M&S, a retailer recognised for its high profile sustainable business strategy ‘Plan A’. Robert shares his perspective on sustainability as a facet of good business and what this means for the GC’s role. I am of the absolute conviction that sustainability is inextricably linked to business performance” “Something that started off as a cost and a question mark has moved to something which has resulted in genuine year on year cost savings and which I think most people can get behind… we have just scratched the surface in terms of what we can save” “If you decide that a sustainable business is a good commercial business – from a profit orientation - part of our job is going to be to keep that message up in the headlines” “It had to be cradle-to-grave so it affected everybody from a lawyer at the head office central function to a sales adviser in a store somewhere and everything in between. It had to become part of the DNA of the organisation. It was no good just playing at it for the purposes of short-term business benefit… It has actually developed a new purpose” “It is important to understand what role we have in building that trust… If it [sustainability] is central to your organisation’s strategy then you have to put in the support structures to defend it. It’s essential that the decision making mechanisms are sorted because what you’re actually doing is making the decisions to defend a very hard-won asset, which is the business strategy around sustainability and around trust.” 13 Beyond Responsibility May 2014Viewpoint: Chris Newby, General Counsel EMEA, AIG As GC with responsibility for AIG’s insurance operations in 7 countries, Chris Newby shares his views on why responsible growth is an essential foundation for sustainable, profitable growth. “From a social, economic, moral and political angle, businesses like ours face a lot of pressure. We have to prove to governments, regulators, our clients, our staff, and our shareholders that we are sustainable.” “Sustainability is a key driver in our business from a number of different angles… We have had a good look at it internally… for example, in order to recruit and retain talent at all levels of the organisation, it is increasingly important to demonstrate what we are giving back to the communities in which we operate and how we are using our assets responsibly. We have a lot of good policies in place. When disaster strikes we are very proud of the fact that we help rebuild communities.” “Our strapline is ‘Bring on Tomorrow.’ I think if we don’t embrace sustainability as a strategic business issue, then we won’t achieve that and we potentially won’t be around tomorrow in the way we would like to be… So to us, fundamentally, it is about building a sustainable business which is there to honour the promises we have made to all our stakeholders.” Not all profits are equal… ‘It may be legal but we’re not going to do it’ is a difficult conversation to have with a business head when a profitable line of business no longer sits comfortably with our corporate values, but it is a necessary one.” Beyond Responsibility May 2014 14Viewpoint: Nick Folland, Group Director – External Affairs, The Co-operative Group Prior to his executive role at The Co-operative Group, Nick Folland has headed up both legal and corporate affairs at other major retail businesses. He expresses why the sustainable business agenda presents a unique opportunity for GCs and in-house lawyers to add value to their organisations. “It began in my belief that the heart of what the General Counsel and Company Secretary does is about doing the right thing.” “If you take that on a left-to-right scale it starts on the left with obeying the law, which tends to be a good starting place when you are trying to do the right thing, but that becomes regulation quite quickly and there is more manoeuvrability around regulations than there is around legislation. Quickly, you then find yourself looking after risk. Then you are into codes of conduct, codes of behaviour and codes of best practice. Then you talk about human rights of the people down your supply chain and then you come to traditional corporate social responsibility. It’s all a continuum around doing the right thing.” “I took this agenda and said what we need to be doing, as lawyers, is getting on the front foot. We need to change the way we behave… How about starting to influence things before they hit us? How about influencing – even writing - the code of conduct? How about working with policy makers and legislators to get the law written in a way which makes most sense for business?” “The reason the goalposts have moved is because we are now dealing with morals and not the law and I think that is going to become our stock in trade.” “I think that as lawyers in organisations we need to be able to guide around moral relativity and then the difficulty we face is how do we do that without becoming the ’fingerwaggers’ – the ‘nay-sayers’, the ‘tutters’… For me there is a piece about sustainability and our whole agenda which is about bringing people on the journey. Why don’t we move away from this binary – its right or wrong – instead let’s just be a bit more collaborative. I am finding that as a lawyer, that is a much more attractive conversation to get people into.” 15 Beyond Responsibility May 2014’Act before you are compelled’; ‘act when it is advisable and not forced’ and when it is ‘preferred and not required’. I think it is within these kinds of concepts that the lawyer sits in the sustainability debate.” Beyond Responsibility May 2014 164. How can lawyers add value to sustainable business? As sustainable business practices continue to be driven in part by the legal and regulatory agenda, this provides a necessary starting point for legal counsel to engage and advise from. Yet a significant number of inhouse lawyers are beginning to apply their positions and skillsets beyond a traditional role to be more proactive as well as reactive; holistic as well as legal; and strategic as well as operational. Some may see this as outside the scope of what the legal counsel is there to do – a view which could certainly be justified. Yet in the same way that the pursuit of sustainability challenges organisations to act beyond their legal responsibilities, so it does for the individual also. For legal counsel, it is an invitation to step back from ‘business as usual’; to re-assess the contribution of their unique skillset in the context of the long-term needs of business and of society. Through doing this, they can – as some have already begun to - realise greater commercial and strategic value for their businesses in the pursuit of sustainability. The following pages explore the opportunities for legal counsel to do this in a number of ways. We asked in-house lawyers to indicate the areas of their work in which they had already integrated sustainable business objectives. We then asked them to indicate the top three areas in which they believe legal counsel could add the most value. 53% 49% Integrating sustainable business issues into legal processes (e.g. contract review and due diligence) Establishing sustainable business structures and policies internally Promoting a sustainable business culture through best practice and leading by example Giving and commissioning legal advice that incorporates relevant ethical as well as legal concerns Receiving and delivering internal training that includes managing legal and sustainability risks jointly Giving forward – looking commentary on sectorspecific law and changes to business units None of the above Other 28% 37% 29% 21% 39% 39% 29% 35% 14% 16% 2% 0% 0% 16% Already an active role Potentially a key role snapshot 49% 53% Beyond Responsibility May 2014 18snapshot Five emerging roles for legal counsel Risk manager There have been plenty of media reports about organisations who have made public claims about their sustainability commitments, but have then been exposed as not following through with these on an operational level. If you recognised this kind of disconnect in your own organisation, would you: Lawyers are approaching sustainability first and foremost as an organisational risk factor. This begins with compliance risk and legal risks associated with new business practices. For many, however, it extends beyond compliance to protecting the broader interests of the organisation, its brand, reputation and stakeholders, in order to safeguard competitiveness in the long-term. Consider it a material risk that is within your remit to address Consider it a material risk that is someone else’s responsibility Not consider it a material risk Not sure/no answer Other (e.g. raising it through existing risk management channels) 31% 29% 12% 26% 2% People want to make promises; they want the community to embrace the projects so they will tell the community how wonderful the project is going to be. You need to be a bit careful there because if it doesn’t turn out to be that wonderful, exactly in the way you said, what level of commitment did you make in terms of PR, and to the reputation or even legally?” Legal counsel, renewable energy company 31% 29% 12% 26% 2% 19 Beyond Responsibility May 2014I see sustainability as an additional risk, as it can mean that we’re giving performance guarantees in relation to sustainability in areas or technologies which aren’t tried and tested… We have to be careful. From a legal perspective we also have to look out for propriety because of the work that we do, sometimes our people like to shout it from the rooftops too quickly when it’s not protected properly – so we have to play a guardian type role.” General counsel, utilities company Sometimes the business comes to you with a project which is based on outsourcing a cloud-based solution which is going to improve the sustainability of the business… the benefits also need to be balanced against the reputational and legal risks, and I think as lawyers we have a role here. Our challenge is not being seen as a blocker to innovation in projects like this.” Senior legal counsel, technology sector The way that problems can go viral and become international problems in a very short space of time I think is something that CEOs and other senior executives are very much alive to. So I think if you’re having to persuade business people that sustainability is something they have to sit up and listen to, I think the social media angle is an easy way in.” VP legal and business affairs, media entertainment company When you start looking at big numbers you realise that there is a significant risk, not in absolute terms or for insurance, but to your reputation. But I see that as part of my role, although if I was simply working from a legal compliance point of view we were absolutely fine. So this went far beyond it, it was a question of reputation and the brand we were trying to build.” General counsel, retail company The real question is who’s taking responsibility for these new forms of risk in the business”. Legal director, energy and utilities company Beyond Responsibility May 2014 20Lawyers and company secretariat are at the heart of company ethics and at the heart of governance in a business… As general transaction advisers and as gatekeepers, they can ensure that sustainability is built into transacting if that is the commitment that their organisations have made.” General counsel, real estate company When it comes to social media, one of the things we need to do is engage much more closely with marketing and the PR teams in the business so that together we can work out how we would react to things.” Senior legal counsel, retail company There is a question around how you approach commercial relationships in a very different way to the way in which historically lawyers address this… Contracts very rarely look forwards in a partnering way and I think that’s one of the challenges. They tend to be quite short-term and they don’t rely a huge amount on trust, but one of the things about sustainability is building much longer-term relationships where you have that trust.” Nick Barwood, Partner, Bond Dickinson Sustainability engineer Lawyers play a central role in structuring the mechanics of business on many levels. Being mindful of sustainable business goals in their everyday work, they have an opportunity to ensure corporate and governance structures, transactions, commercial partnerships, policies and procedures are effectively aligned to these interests. 21 Beyond Responsibility May 2014When it comes to business continuity and crisis management at a corporate level, you should as the GC try to make sure that there is a lawyer being part of that debate and the outcome in it… You’ve got to be prepared to be a nuisance… It doesn’t have to be grandstanding and finger-wagging, there are different ways to use your influence within the organisation.” Robert Ivens, Head of Legal, Marks and Spencer If you know what’s expected and why it’s important, it’s there in the back of your mind and can translate into work when out doing deals.” Legal counsel, energy and utilities company I think there’s a question about what the lawyers are there to do… I think there’s something about all of these sustainability issues about making sure that you define the remit of the roles properly so that people have accountability for that as well as delivering a good, well managed contract.” Legal director, energy and utilities company It seems that corporate counsel are becoming sustainability engineers, not just business advisers, but engineering sustainability into the fabric of the organisation” Director of executive education, UK University Beyond Responsibility May 2014 22snapshot I think as you get more experienced as a lawyer, yes you’ve got rules and regulations to comply with, but actually the question is ‘what is the right thing to do?’” General counsel, insurance company Moral compass Many in-house lawyers recognise a need to create and protect ‘moral capital’ for their organisations, as increasingly well-informed stakeholders expect businesses to not only do what is ‘legal’ but what is ‘right’. Lawyers’ training and skills in dealing with ‘the rules’ make them well equipped to help their organisations make wise decisions in the context of these changing ethical dynamics. Do you see your role as acting as a ‘moral compass’ for your organisation (integrating ethical as well as legal factors into your advice)? Yes – it is an expected part of my role Yes – although it is not an expected part of my role No No answer 49% 2% 37% 12% 49% 37% 12% 2% 23 Beyond Responsibility May 2014As lawyers, we do not make the rules, but we are expert at their application: at defining or ‘translating’ them for different audiences; at evaluating whether a particular action or circumstance falls within a specified rule; and at spotting where systems of rules conflict and how such conflict might be resolved… So if we as lawyers can understand better what the rules are, including the shifting ‘social rules’ accepted by important stakeholders, then we can help our clients to anticipate and respond to them in appropriate terms.” Caryl Walter, Associate, Bond Dickinson When you start out as an in-house lawyer, there is a temptation to say ‘yes’ to the business. As you become more experienced, you will feel less conflicted, and more able to say what you feel to be right. As you become embedded in a company, your input has more impact, and that is when you can show you exemplify good behaviours.” Nina Barzaksai, corporate governance committee Chair, C&I Group Our advice incorporates legal, ethical, political, good governance issues and a whole host of other aspects that are outside the strict remit of legal advice… Sometimes that means delivering opinions that make you unpopular but which, deep down, in-house clients know is the correct line to take.” Senior legal counsel, public sector Beyond Responsibility May 2014 24For me it’s a part of the role that I take seriously. It’s up to me to define the role to some extent but I don’t think it’s my exclusive preserve. I would hope that the people I’m working with would also come to the table armed with views on what is ethically, morally acceptable or consistent with our brand values. To some extent it’s easier for the lawyer because you have had extensive training in the law and in ethics as well, but that doesn’t mean that other people don’t have view on what is ethical.” General counsel, pharmaceuticals company Making the lawyer, or indeed any one individual, sole arbiter of these issues risks that other important players who can influence the direction of an organisation will consider it ‘someone else’s problem’… Lawyers can play a part in ensuring that moral and ethical issues are considered and addressed whilst at the same time being true to their own moral compass and professional obligations.” Nathan Peacey, Partner, Bond Dickinson 25 Beyond Responsibility May 2014Strategic enabler Sustainability is an ambitious goal that will require organisations and entire industries to find new, sometimes radically different, ways of working. By proactively engaging in their organisations’ strategic agendas lawyers can play a pivotal role in achieving them. This may involve acting early to avoid potential legal or regulatory obstacles, finding ways to influence government policy, or creating innovative legal solutions to the corporate and commercial challenges surrounding sustainable business. It’s quite easy for the legal team to be embedded in the bureaucracy of the organisation and to just do things the way they’ve always done them. If you’re working in a business that is trying to innovate, you can’t do things the way you’ve always done them – you’ve got to take some risks.” Legal director, energy and utilities company In previous incarnations of our legal department, we’ve very much been seen as the last minute hurdle to jump through… they’ll come to you three minutes before the deal’s got to be signed saying ‘here’s the contract, proof it’… but it just can’t be done that way. So it’s very much about getting in at the start and being the commercial sounding board to help rather than intervening at the last minute.” Head of legal, retail company Our role is about making it happen… We tend to be quite outcomes focussed and don’t always drive a very hard bargain. We could but it’s not about that – it’s a collaboration. It’s difficult sometimes - you have to swallow quite a bit when you’re trying something really novel in the field of sustainability.” General counsel, renewable energy company Beyond Responsibility May 2014 26The business is constantly changing and we can’t afford to stand still, so you know that you always have to be proactive and there’s no better way than by getting into the business and making those people your colleagues and friends, and being a trusted adviser across what they do. The more interest you show in that, the more you’re going to be that person they come to for those difficult issues that people try to manage themselves until it’s too late.” Head of legal, outsourcing company Environmental law has for some time been defining and altering the market place. For example, we have the concept of ‘edited choice’ where products such as certain types of light bulbs are excluded from the market place because they are not considered to meet sustainability standards. While this type of regulation can pose a risk to uninformed businesses, many have exploited opportunities in the market because they were quick to appreciate the opportunities of early mover advantage.” General counsel, renewable energy company Sometimes it’s got nothing to do with being a lawyer - it’s all got to do with the fact we’re the ones who tend to get consulted about diverse things and we have an ability to join the dots for everybody else.” Julian Hamblin, Partner, Bond Dickinson 27 Beyond Responsibility May 2014Business leader A number of lawyers are playing active leadership roles in the sustainability agenda, helping their organisations and stakeholders engage with it in a way that makes business sense. The lawyer’s professional skillset and position in an organisation is valuable in navigating new territory and facilitating the conversations necessary to find constructive routes forward in the midst of competing priorities. Sustainability is proving a legitimate career development path for senior lawyers looking to broaden their roles within the in-house structure. Because of the challenging times that we live in and the vexing corporate atmosphere in which companies have to operate, lawyers are at the heart of many of the decision making processes that can take us in one direction or the other. This is an opportunity, a great opportunity, to become true agents of change – to help their organisations move forward on the right course and embrace the new opportunities that lie ahead in sustainability.” Jose Maria Figueres, President, Carbon War Room Leaders need to be able to negotiate their way around multiple perspectives and the general counsel does that every day of the week. Lawyers are leaders in their businesses and they need to commit to this challenge.” General counsel, real estate company Beyond Responsibility May 2014 28In the role of the company secretary and general counsel, I think we’re prime people to drive out the sustainability issue as the next stage in our journey. We’re in a very privileged position that from where we sit, we have the huge advantage of seeing across the whole business and so can join people together.” Jose Maria Figueres, President, Carbon War Room We’ve made some very public statements around sustainability, but I think we need to be careful in how we go about it because you have to bring everybody else with you, and you have to appeal to them in a way that makes sense.” Director of global banking compliance, financial services company There needs to be a mindset in order to be a sustainable business - to take a bit of a leap of faith and to jump into the unknown without the empirical evidence to support what you are doing.” General counsel, real estate company 29 Beyond Responsibility March 20145. Takeaway insights for in-house counsel Even in light of these varying roles for legal counsel, the vast scope and scale of sustainable business challenges can make it difficult to know where to start. We offer ten practical ideas for in-house counsel looking to add value within their own organisations.1 2 3 4 5 6 7 8 9 10 The harder you look, the more sustainability risks you will find. Many lie beyond the boundaries of your own immediate corporate footprint, e.g. with suppliers. This means it’s important to pick your battles carefully. Prioritise identifying and resourcing those risks that are most material to business performance and the brand you want to build, and those you can realistically obtain the information and leverage to address. If doing business sustainably and responsibly is important to your organisation’s strategy and reputation, it is important to assess where legal teams should be managing associated risks. It may, for example, have implications for the due diligence undertaken in a transaction, the approach chosen to handle a dispute, or the decision to go beyond standards of basic compliance to adopt best practice. A reputation as a sustainable and responsible business is a strategic asset that is hard won and easily tarnished. Establishing decision-making mechanisms – in combination with key colleagues, for example, in the PR and marketing departments - will enable you to act decisively when crisis hits. Consider how you can embed sustainability as an instinctive, strategic mind-set within the legal team, e.g. by defining it in roles and objectives, or exposing team members to the issues through closer involvement with relevant business units or committees. Trust in an organisation is at risk every time it acts in a way that is out of sync with the values it professes or that stakeholders expect. Seek to guard corporate integrity by understanding these values and expectations and communicating them within the organisation. Where risks exist, manage them proactively by equipping the wider business to act with greater consistency through internal buy-in and effective organisational infrastructure. Consider how you can add greater value to the business by working more closely with other business functions. For example, some legal teams work successfully with colleagues in Procurement, Corporate Responsibility and Public Affairs to provide seamless policy/legal advice and prepare board papers on key strategic topics within this agenda. Look for ways to get a seat at the table in the earlier stages of projects where you can add greater strategic value to the business. This may mean changing perceptions of the legal function as the ‘last minute hoop to jump through’ to those who can actually enable innovation. By horizon-scanning the legal and regulatory landscape, you can create opportunities to gain early mover advantage around sustainability issues – being ready for future compliance standards and influencing the shape of new laws to enable sustainable business goals. The complexity of sustainable business dilemmas means a cross-disciplinary approach is essential for success. This presents a ‘facilitative leadership’ role for legal counsel who are naturally placed for bringing multi-disciplinary groups together and brokering the conversations that will enable businesses – and industries – to bring sustainable innovations to market. By engaging in dialogue that is not legalistic and binary (‘right or wrong’), but more positive and collaborative, you can encourage your colleagues to ‘own’ the organisation’s definition and ambition of sustainability. Participants in such a conversation are more likely to be influenced than passive bystanders. in house insights 31 Beyond Responsibility March 2014If, for the corporation, sustainability is the evolution of ‘good business’, then for the lawyer, it is the evolution of ‘commerciality’. It is well accepted that being an effective lawyer requires not just legal expertise, but a real understanding of a business’ objectives and the commercial dynamics that surround them. When it comes down to it, lawyers who really understand these more holistic dimensions of a business’s activities will be in a position to provide the best counsel. By the same token, the diversity of organisations, lawyers and legal teams means that clearly this is not a case of one-size-fits-all. Yet it is also clear that the sustainable business agenda presents a variety of roles legal counsel can develop to contribute to the long-term success of their organisations: For the practically-minded, as risk managers and sustainability engineers; for the ethically astute, as moral compasses; and for the visionaries, as strategic enablers and business leaders. The important thing is to find what will work for you and for your organisation. Our findings indicate that these are still early days for the legal profession’s engagement with corporate sustainability. Yet a significant proportion of the legal community is ready to engage with these issues and make a difference, which is crucial if business and society are to prosper in the world we now face.