A panel discussion on ESG and professional services. Hosted by Weightmans, a national law firm, and business development organisation Pro-Manchester.
Editor CAROLINE PAIGE
What ESG is and why you should be taking it seriously
According to Forbes, the ESG movement represents over a third of all assets under management. The ESG (environment, social and governance) framework was first proposed by the United Nations Secretary General and UN Global Compact in collaboration with the Swiss government in 2004. A theoretical approach was endorsed by 23 financial institutions. These included Goldman Sachs, Credit Suisse, Morgan Stanley and HSBC, the International Finance Corporation and World Bank. It intended to evaluate companies based on their effort to support social and environmental goals.
The Harvard Business School’s George Serefeim – author of Purpose and Profit: How Business Can Lift Up the World – warns that companies don’t win over investors by just doing the basics. Issuing sustainability reports and engaging in other standard ESG practices alone is not enough. He recommends five key strategies: identify the issues in your industry and develop initiatives that set you apart; ensure the commitment of the board by creating accountability mechanisms; infuse your organisation with a sense of purpose and enthusiasm for sustainability and good governance; decentralise ESG activities throughout your operations; and communicate regularly and transparently about ESG matters. Over the past decade, institutional investors have become increasingly interested in companies’ impact on sustainability, social responsibility and governance.
The panel discussion covered: ESG strategy, implementation, and influencing clients and supply chains
The panellists were Stephanie Beat (Certas Energy), Adam Waller (PwC), Abhay Srivastava (Weightmans) and the chair Simon Colvin (Weightmans).
IN A NUTSHELL
The Weightmans website describes the firm as a socially and environmentally conscious company. The session intended to explore how professional services can influence their clients and supply chains.
Each speaker also acknowledged the importance of taking their own workforce on the journey. All met notable resistance from some older employees in senior positions. All highlighted the importance of representation from across the business.
Transparency is needed to build trust and momentum.
Articulating what the organisation is doing and intended outcomes is key to driving change.
As is measuring impact – if you want to know if you’re having one.
Keep reading for the longer version.
How important is ESG in your organisation?
Stephanie Beat, Certas Energy
Stephanie acknowledged that as a supplier of fossil fuels Certas does have a wider responsibility in terms of environmental impact. She said the organisation understands the concerns of their customers. They want to lead the sector in the promotion and adoption of renewable energy. Certas can influence suppliers and customers in their decision-making. ESG is in every board agenda and is a crucial aspect of strategic decisions for the future of the business.
Stephanie feels work is still needed to prevent greenwashing (unsubstantiated ‘green’ claims). They have a clearly articulated sustainability strategy with reporting targets, but implementation can still be difficult. The project has generated a lot of interest. Now they need to take their workforce, customers and suppliers with them. They created an ESG committee to ensure an even spread of representation. Stephanie said there’s more to be done to take their people on the journey. Pulling together what’s happening across the business has been important.
Adam Waller, PwC
Adam feels they take ESG very seriously. They want 80% of their suppliers to have net zero targets in their own policies. They’re at around 75% – so still working at it but they’re not far off. He highlighted the importance of measuring the impact of ESG policies – and sharing results. Using communications to articulate what they’re doing promotes their intentions and priorities. This openness is increasingly important to their workforce and clients.
They’re working on the diversity of their supplier base. They find local suppliers who don’t tend to get access to clients their size and with their budgets. Adam finds ESG is important to these suppliers. They often challenge ESG policies and want to know what they’re doing. He also stressed the importance of training your workforce. They need to understand the organisations intended outcomes for ESG policy and how to be involved. Uptake is huge – particularly among younger employees (who are also lower in seniority).
Adam recommends all businesses engage in ESG and embed it in their policy and strategy. But he doesn’t think it’s effective at board level without input from other areas of the business. He told us: “It’s going to need innovation and radical thinking. That doesn’t come from small pockets of the business. ESG is no longer a niche area.” He describes it as a key strategic driver. It’s central to business decisions and essential for business resilience and success. He points to its use by investors as a measure of resilience and its potential for competitive advantage. People are increasingly conscious of environmental impact when buying products and services.
Adam referred to the growing scepticism of unmeasured claims and greenwashing. He cited carbon offsetting as an example. He stressed the importance of articulating how you measure and how you improve your impact. It’s important to be able to show what you’ve done and the difference it made. He told us to talk publicly about targets and impact – even if you don’t meet them. Because it builds trust and conversation.
Abhay Srivastava, Weightmans
Abhay made clear that ESG is “no longer a thing that’s just good to have. It’s now an important aspect of customer requests.” It has implications along the supplier chain. And younger staff want to know about the company’s policies on gender and equality.
Abhay acknowledged that it can be hard to choose where to start. Weightmans started by consulting with stakeholders, clients and charity partners. The result of the consultation revealed five or six areas as priorities. Transparency emerged as the top priority. This was the number one requirement expressed by every group. The environment, equality, gender and responsible procurement were also key areas. Next, they defined what ‘good’ will look like. Now, they’re assessing the gap between where they are and where ‘good’ is. Abhay stressed the importance of meaningful KPIs to measure progress and align strategy.
Weightmans also find ESG is part of the measurement of risk considered by investors. Abhay finds investors consider the firm’s impact on communities and employment opportunities. To address this, they measure impact and provide training and apprenticeships in ESG for younger employees.
What’s the biggest ESG challenge for your organisation?
Abhay Srivastava, Weightmans
Abhay feels that upskilling is the biggest challenge faced by Weightmans. They have champions in place, but they need to be distributed more evenly around the organisation. Implementation is another big challenge – how they partner with suppliers and clients, prevent greenwashing and pre-empt issues. He finds clients often have the right skills and policies but find it hard to implement them. He feels innovation is needed to fully implement ESG policies throughout organisations.
Stephanie Beat, Certas Energy
For Certas the biggest challenge is the energy transition journey. At a smaller level, the challenge is upskilling across the company and bringing colleagues on the journey. An Inspire Programme was created to help grow innovation from their own people. Innovation often comes from younger employees – with less influence. Generally, there’s less interest in change among the more senior (senior in both age and responsibility). Another, related challenge, is attracting and retaining talent. It’s difficult to retain the talent needed across the business objectives. This is because those people don’t see their views and priorities reflected in the organisation and strategy of the business.
Adam Waller, PwC
The biggest challenge for PwC is diversity and pay equality. Adam says they’re not where they should be. This is most notable at senior level. This doesn’t represent a gender equal employer – that’s their biggest challenge.
What do you want to change to help ESG make real progress?
Stephanie Beat, Certas Energy
Stephanie feels professional services need to improve their communication. They’re unable to express what they do in accessible language. Lack of clarity and overuse of jargon means even those working in ESG don’t understand what their colleagues are saying. More effort is needed to ensure communications make sense. Without that people can’t access or even get interested in the conversation. That hinders progress.
Adam Waller, PwC
Adam also wants organisations to make ESG simple and accessible. He finds there’s a tendency to over complicate topics and a lack of awareness about how to communicate. He advises businesses to articulate what they’re doing and their objectives in an engaging and accessible way.
Abhay Srivastava, Weightmans
Abhay wants issues to be addressed better at top levels. He feels the highest levels of an organisation should be accountable for ESG.
Simon Colvin, Weightmans
In his summary, Simon recognised these problems. He finds leaders often don’t understand their own ESG policies. He would like to see better accountability and articulation.
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The speakers
Stephanie Beat Head of Legal and Compliance | Certas Energy
Stephanie is part of a leadership team ensuring compliance is at the heart of Certas Energy’s business and commercial strategy. Stephanie is a member of the Lawyers for Net Zero initiative and works with general counsels and heads of legal across a variety of industries. They champion net zero for their organisations.
Abhay Srivastava Environmental, Social and Governance Manager | Weightmans
Abhay looks after ESG strategy at Weightmans. He develops its integration into the firm’s operating model. He also supports clients with their ESG journeys. Over the last 13 years, Abhay’s worked in sustainability, impact investment, environmental management and ESG. He’s on the board of two impact-focused enterprises working in healthcare and sustainable fashion.
Adam Waller NW Office Senior Partner and Tax Partner | PwC
Adam leads the Northern ESG team. He promotes better understanding of ESG by sharing learning and best practice. He also helps clients develop tangible action plans for sustainability and good corporate citizenship.
Simon Colvin Partner | Weightmans
Simon is a specialist ESG lawyer at Weightmans. He leads the Energy and Utilities Sector and the Environment teams. He’s a client relationship partner for several leading waste and resource management, energy and utility companies. This work gives him insight into the pressures experienced by operators in these sectors.
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