Goodwin Insights March 15, 2021

How Corporate Social Responsibility and Environmental, Social and Governance Have Become More Important Than Ever

Now more than ever, companies are held accountable for making a positive impact on social, economic and environmental aspects of society. Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG) have become a priority for many organizations as they assess their responsibility to their employees and the broader community, as well as consider the merits of certain corporate structures, including benefit corporations and corporate foundations.

Goodwin’s CSR + ESG practice leader Danielle Reyes sat down with our client relations team to discuss why the work for clients across the practice is more important than ever and how it impacts our clients’ businesses and industries.

What made you decide to get involved and lead Goodwin’s CSR & ESG practice?

Danielle: As a former in-house counsel, I had trouble getting outside counsel support for the CSR & ESG function that went beyond tax advice. Based on my own experience, I knew there were other clients of Goodwin’s that were looking for a more robust offering and I was confident that we could provide those services.

Carl: I have always been interested in the intersection of law and policy with the human experience. I like that our CSR & ESG practice provides the chance to work on the most critical and cutting-edge issues related to how corporations work with their stakeholders. CSR & ESG really sits at the nexus of all of those things.

What is particularly important about CSR + ESG at Goodwin?

Danielle: One thing that is unique about our practice is that Goodwin advises clients at every stage of their evolution. We advise startups and large public companies and everything in between. All of these companies have CSR & ESG needs. They are different as they evolve, and we can use our expertise at every level to tailor the law and policy advice for particular client needs. In addition, we are hyper-collaborative with groups such as Impact & Responsible Investing (IRI) and our Tax-Exempt Organizations group. As a practice we have to work together to serve clients' CSR & ESG needs. There's no way to have a CSR & ESG practice in a silo.

Why is CSR & ESG more important than ever?

Carl: CSR & ESG is more important because it's more important than ever to our clients. Across all industries, companies and their leaders are facing calls for new requirements and heightened accountability related to the effect of their operations on stakeholders and the environment. A growing number of investors are increasingly focused on moving capital toward sustainable and socially responsible investments. As a result, companies are being asked to govern in a way that provides more accountability for responding to racial injustices; protecting employee health; promoting sustainability; and adding to diversity, equity and inclusion within their organization. We know this is changing industry. For example, a recently published report from McKinsey & Company found that 83 percent of C-suite executives expect ESG programs will contribute more shareholder value over the next five years than they do today. The same group indicated that they would pay a premium to acquire a company with a positive record for ESG issues over one with a negative record.

Could you share the key considerations for the industries that Goodwin serves in the area of CSR & ESG?

Danielle: Almost every business unit and legal practice area within the firm touches on some aspect of CSR & ESG. As noted earlier, all industries, companies and their leaders are facing new requirements, and heightened accountability. Stakeholders are demanding transparency, increased scrutiny, and consequences for failing to factor CSR & ESG into the company's mission and overall strategy. This will really be an area of concern in 2021 and beyond because it will impact factors in every aspect of a company's management and governance as a result. There is a lot for leaders of these organizations to navigate — everything from investor expectations and employee demands, to community needs and consumer feedback. These issues cut across all industries and will be an area of focus for almost all corporations moving forward. This is mainly because failing to meet stakeholder expectations or comply with related requirements creates legal and reputational risks affecting the bottom line.

Carl: Goodwin's CSR & ESG practice will provide guidance to leaders on these increased demands and help companies prepare for and navigate these challenges. In addition, our CSR & ESG practice will help leaders capitalize on opportunities to develop new initiatives that speak to stakeholders across the board.

Carl and Danielle also recently moderated a webinar titled Times Are Changing: What to Expect in CSR + ESG in 2021 to examine emerging trends and prospects, as well as insights and best practices in this space.