IHL webinar: Conversations with clients - ESG

As a part of conversations with clients webinar series, Jonathan Lipman, Group General Counsel of Mercedes-Benz UK, joined Sebastian Price to discuss what IHL team can do to help deliver ESG goals.

What does environmental, social and governance (ESG) mean?

ESG is about in-house lawyers (IHLs) wanting to do the right thing, together whilst driving the wider goals of the business.

Jonathan summarised what ESG means to him:

• Environmental – broadly about sustainability and green initiatives
• Social – diversity and inclusion considerations linked strongly to HR practices
• Governance – high-level representation within the board of businesses, but also around the firm’s main areas of compliance and ethics

• ESG considerations act as a useful reminder as it shows that these responsibilities are shared across the business and don’t always sit within one function
• He voiced that individuals want to do the right thing but having a focus helps

Who should be setting ESG agenda?

• This depends on the business you are, you may well have a department and bigger focus on sustainability if the business has many factories and is a large polluter
• Certain environmental based areas have fallen with the IHL team at Mercedes-Benz UK, including: battery reporting, packaging waste, end of life vehicle recycling
• Other areas have fallen to other functions:
  • Climate change levy – Finance
  • Reduce carbon footprint of buildings – Real Estate
• A lot of businesses won’t need a Sustainability lawyer specifically but it needs to be drawn together
• At Mercedes-Benz UK, the Finance department have started an informal and voluntary group  of15 people – three of the group are lawyers who put their hand-up to see how they can help
• The group is called “We are Sustainability” and meet every month and look at a variety of items, including:
  • 100% renewable energy
  • Food waste
  • More sustainable food options for employees
  • Limiting the use of plastic in the office
  • Electric vehicles car schemes
• The IHL team will also use their next strategy day to focus on ESG factors and to discuss how they can help improve their ESG initiatives both as a business and within their own personal lives
• Lawyers typically have good characteristics to demonstrate consideration and a willingness to improve in this area – for example traits such as being analytical, logical and practical are all common
• Supply chains are starting to be managed a bit more proactively with the use of sustainability clauses in contracts

Difficulties and obstacles to overcome

• The topic of ESG is evolving every day so don’t let not knowing a lot put off trying to make a difference– it’s more than likely that others are in exactly the same situation
• There can be opposing views but these are there to be discussed. An example cited was around “the building ” and tension between the best way to run the building for ESG purposes versus wanting a continued presence and traditional business needs
• A key area to think about is how do you have the time to get ESG into mindset? It is a responsibility for all to think about their ESG footprint about how it impacts on what they’re doing in everything they do
• Practical things can help to spread this message, ranging from virtual updates sent to staff to even stalls in within points of the office with high footfall to talk demonstrate positive work being carried out
• ESG is not just for senior figures to spearhead, a pressure now applies to all employees to think about how they can make a positive and sustainable difference

Key point – mindset

• Mindset – very few are doing a lot in this space so don’t panic and think others are doing a lot. Jonathan encourages all to roll up their sleeves and get involved
• The various components of ESG have been on the agenda for some time now, it’s helping to bring it together and make evolve and mature to ensure continual progress