et’s not kid ourselves, no one has ever mistaken their company’s legal and compliance teams for free-wheelers. Legal and Compliance are where ideas go to die. But like mama always said, what doesn’t kill you makes you stronger. So it’s with affection we welcome the important critique from these stakeholders. Legal and compliance teams are, in fact, absolutely essential to a company’s operations. In fact, when empowered to do so, ESG provides a showcase for their added value.
The two roles are complementary but separate. Think of them as, respectively, insurance and safety. The legal department’s role is insurance, to reduce liability. Compliance, meanwhile, is safety, preventing activities that may cause liability. One buys the parachute while the other makes sure it is packed and ready to be deployed.
In terms of ESG, the legal and compliance teams make sure that a company’s ESG initiatives have a sound foundational purpose and keep them integrated with operations. Together, the two play a critical role in ensuring that a company’s stakeholder obligations are its priorities.
Keeping that in mind, here are 10 ways legal and compliance roles shine when considering ESG factors.
Legal mitigates a company’s exposure to risk in the following five ways:
Similarly, compliance teams help mitigate risk by making sure a company’s ESG initiatives follow relevant laws and regulations, are properly disclosed, align with industry best practices, and are integrated into operations. The work this role does already in the following areas would feed directly into core ESG efforts:
Both the legal and compliance roles play a critical role in a company’s ESG strategy. They help identify and manage risks, draft policies and procedures, conduct due diligence, monitor the results, and ensure accurate and complete disclosures.
Beyond working with each other, both teams work closely with other stakeholders to help companies achieve their ESG objectives while doing their more traditional obligations of mitigating potential legal risks. By being involved in the ESG effort, legal and compliance teams can help companies build a sustainable and responsible business, and maintain stakeholder trust and confidence.