Legal teams have ‘essential role’ in achieving ESG targets
The general counsel of a multinational consumer packaged goods company has provided pivotal insight into the role legal teams have in addressing environmental, social and governance (ESG) initiatives.
Speaking on a recent episode of The Corporate Counsel Show, Unilever general counsel David Dwyer unpacked the responsibility law departments have in helping businesses achieve their ESG targets and how law departments can and must evolve to meet such challenges.
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In today’s corporate landscape, the importance of ESG initiatives cannot be overstated, Mr Dwyer flagged, noting that such matters have emerged as a significant and increasingly urgent priority for businesses.
“It’s highly significant, I think, for us as a business because increasingly, it’s imperative for our customers, so the likes of Woolworths and Coles, which are very important customers for us but also our consumers – we’re increasingly seeing consumer preference for companies and their products that have good solid ESG credentials, and that’s particularly amongst the younger generations.
“We’re seeing that it’s becoming part of the commercial success of our company,” he said.
The regulatory landscape is evolving, Mr Dwyer said, with entities like the Australian Competition and Consumer Commission (ACCC) focusing on issues like greenwashing. Going forward, he predicts a surge in scrutiny of ESG reporting by companies, including those not publicly listed, like Unilever.
“On the legal side, we are seeing increasing regulation. There will be increasing scrutiny of ESG reporting by companies,” Mr Dwyer explained.
“Coming into effect in the next few years, there will be climate-related public disclosures that companies will have to make and that will include companies with the scale of Unilever even though we’re not publicly listed.
“So, it’s a thread which is running across the business cross-functionally, whether it’s our marketing teams, our sales teams, our finance teams, and that’s, I think, where the legal team has a significant contribution to make.”
Flagging another trend, Mr Dwyer noted that the focus on ESG-related issues has shifted from a reactive stance to a proactive one in recent years.
As an example, he pointed to Unilever, which has implemented strategies such as the Unilever Sustainable Living Plan, now known as the Compass. Such proactive initiatives, Mr Dwyer said, aim to ensure that their operations adhere to ESG principles and do not violate any specific laws or regulations.
“[The stance on ESG] has certainly flipped over into [being] proactive these days. We don’t wait to, for example, receive a challenge from a regulator or competitor. We don’t wait for an emerging trend with respect to palm oil to come up at Unilever.
“We are very active in this space, and I think part of that has been the B Corp certification that we achieved last year.”
The role of the GC
Going forward, Mr Dwyer believes that legal departments are well positioned to advise and manage ESG-related risks. Legal teams, due to their broad reach across the entire business, can influence various aspects of ESG, including the social and governance dimensions.
“I think legal departments are very well placed to advise and manage some of the risks associated with ESG because we do, unlike maybe some other functions, broadly cover the entire business,” he said.
“If we look at ESG and, sometimes, people always think of the E – environment and less about the social and governance aspects of these plans. We deal with, for example, HR, we deal with the factories, we deal with our fleet choices, the cars that our salespeople go around in. So, we are very well placed to advise but also broadly manage how we approach these risks.”
NB: This transcript has been edited slightly for publishing purposes. You can listen to the full episode here: