The role of the legal department continues to expand, both in scope and complexity. New responsibilities lead to new questions, leaving room for uncertainty. That’s why the Hanzo team decided to launch the luminary series, featuring discussions with thought leaders in the growing fields of legal operations and compliance. We are specifically looking for experts who can offer helpful advice and encouragement to in-house counsel struggling with these new challenges.
Our first guest, Christine Uri, exemplifies the balance between optimism and diligence that we want to present. Christine is both legal and sustainability director at ENGIE Impact, a global company focused on sustainable energy use and environmental compliance. For more on Christine – and why she thinks lawyers are uniquely positioned to be agents of change in their organizations – check out our introductory article.
In our first enlightening session, we sat down with Christine to delve deeper into her work. Here are some of the topics we covered.
What is ESG and what is driving this movement?
The discussion started with a clarification of what we mean when we talk about ESG initiatives. “Broadly, ESG or environmental, social and governance metrics refer to a set of non-financial metrics that are used for public company ratings,” Christine said. “Environmental metrics include goals such as carbon footprint, water consumption, and waste metrics. Social covers a wide variety of issues ranging from human rights to diversity, equity and inclusion. And governance is the area most familiar to legal and compliance professionals, as it encompasses ethics and good business management. These non-financial measures speak to the long-term sustainability of businesses in our increasingly globalized and connected world.
There has been a steady increase in pressure to engage in ESG programs thoughtfully, but the drivers tend to vary depending on a company’s primary geographic footprint. “Here in the United States, a lot of it is business-driven. Companies are under pressure from all sides: regulators, activists, and increasingly investors and insurance companies,” explains Christine. “As these stakeholders really start to focus on ESG measures, and in particular on climate change, this attention is trickling down to companies. Then there is also pressure from consumers, customers and employees. All these interests put ESG concerns at the forefront of business in the United States”
Globally, however, there are usually different drivers. “In Europe it’s much more regulated, so you see more government initiatives,” she continued. “For example, there is a supply chain law in Germany that sets substantive rules for how German companies manage and report on their supply chains. It creates more transparency than we have here in the United States”
Speaking of transparency, we explored with Christine, who holds companies accountable for their performance on ESG metrics like net zero carbon emissions?
Who governs Net-Zero commitments?
Companies can – and do – set ambitious targets and announce ambitious commitments on climate change measures such as carbon emissions. But there is no single global regulatory governance structure that compels companies to meet these commitments. That doesn’t mean it’s a free game, though; In the United States, Christine noted, companies are required to ensure that their statements to the market are factual and accurate. “With consumer fraud considerations, companies are facing greater scrutiny of the accuracy of their claims. The SEC is becoming much more active in this area, with more requirements and oversight around transparency of claims. carbon emissions, at least.
However, it turns out that climate change goals are particularly difficult to set and track. “There are a lot of unknowns in trying to measure something like a carbon footprint,” Christine said. Getting the right data and keeping track of it is an essential step in the evolution of ESG programs.
The role of data and archiving in setting and achieving environmental goals
Christine noted that collecting environmental metrics such as carbon emissions is exceptionally difficult and requires a lot of data. “People are often surprised by the amount of data collection needed to back up a carbon measurement or carbon reduction claim. Successful companies are those that realize they need to invest in having strong systems in place to collect and track this data. And of course, if you want to be able to back up any type of claim, you need to have a record of it.
The pressure to achieve meaningful environmental goals will not let up. Not only are most countries implementing additional regulations on environmental impacts, but the general public is increasingly concerned about the need for real action as they feel the impacts of climate change in their local communities.
But rather than feeling overwhelmed, Christine said: ‘I choose optimism. I choose to believe in humanity and believe that this is something that we will collectively come together and solve. Every action counts, so the most important thing is to start somewhere.
This synopsis only samples the wide-ranging conversation we shared with Christine when discussing the Luminary series. She also discussed the role of CSO in creating change, the surprising complexity of supply chains, the double-edged sword of two-hour delivery, the danger of excessive marketing claims and greenwashing claims, and more.
Don’t miss the full discussion; watch the on-demand replay here. When you access the webinar, you can also download a special document that Christine created for our audience, which explains the five key considerations for the General Counsel when creating ESG programs.