ESG Survey 2024 – analysis and discussion

Less than half (43 per cent) of law firms actively monitor and prepare for environmental, social and governance (ESG) developments for their own operations, which is down by almost a fifth (62 per cent) in two years, according to a recent survey conducted by the International Bar Association’s (IBA) Law Firm Management ESG Subcommittee. 

This is despite an increase in ESG regulations, litigation and reporting requirements globally, with respondents (60 per cent) seeing this increase demand for ESG support from clients over the past year. 64 per cent of firms monitor and advise on ESG developments for clients, which is down from 82 per cent in the 2022 survey. 

In terms of how ESG is integrated into law firm practices and governance, eight in ten firms have either a dedicated ESG practice group or an integrated team from multiple practice groups to respond to client demand relating to ESG. However, almost two thirds of respondents (65 per cent) have not been asked by clients to commit to specific ESG standards. Nonetheless, over half of respondents (54 per cent) indicate that their firm has a dedicated committee looking at internal ESG strategies and policies for their firm, an increase from 48 per cent in 2022.

The survey, which includes insights from over 150 law firm leaders – from a cross-section of the profession including international, national and boutique firms – also found that 59 per cent of respondents indicated that their firm had not calculated their carbon footprint, with only 11 per cent of firms calculating Scope 1, 2 and 3 emissions. 

Zulon Begum, a partner at CM Murray and Co-Chair of the IBA Law Firm Management ESG Subcommittee, said: ‘What we found through this survey is that law firms understand the needs for ESG expertise to advise clients in that respect, but a lot more needs to be done to implement efficient ESG strategies internally. It seems that, in many law firms, ESG is not sufficiently embedded into the monitoring, reporting and decision-making process. This will be particularly important as governments everywhere ramp up efforts to net zero pathways. 

‘If the legal profession wishes to stay ahead, it ought to play a strategic role in demonstrating leadership in response to a rapidly changing world. This means aligning their words, promises, or principles with action and walking the talk.’ 

While the social pillar of ESG is included in the majority of firms’ strategies, there is significant room for improvement. Notably, 62 per cent of firms lack a clear programme to support social mobility in their recruitment processes. Social mobility programmes aim to achieve equality of opportunity, allowing access to law firms regardless of socio-economic background. The absence of such programmes can perpetuate discrimination, leading to anxiety, depression, lower productivity and reduced job satisfaction. Conversely, only ten per cent of firms do not have initiatives to improve employee wellbeing, reflecting a positive trend in addressing workplace expectations related to wellbeing. 

Nicky Sinker, a partner at Auditel and a member of the Law Firm Management ESG Subcommittee, said: ‘With ESG regulations, litigation and reporting requirements increasing globally and this trend expected to continue, law firms have an increasingly crucial role to play in keeping clients abreast of developments, helping them navigate this changing landscape and a duty of care to advise them on ESG risks.

With the environmental pillar of ESG being the least represented in firm strategies it is clear that there is still a long way to go before the industry is contributing to the broader global target of net zero by 2050. Measurement of carbon footprint and then the development of carbon reduction plans has to be on the priority list for the year ahead, not least to protect firms’ ability to win work.’

The survey indicates a shift in focus over the past three years from understanding ‘what’ ESG entails to ‘how’ it can be implemented effectively. According to the survey, more than 90 per cent of respondents have integrated ESG factors into their overall business strategy to some extent. However, the survey underscores the need for law firms to incorporate ESG into more strategic and impactful decision-making processes.

The full findings of the survey can be found here.

Methodology

This ESG survey is the third annual consecutive survey conducted by the Law Firm Management ESG Subcommittee. Over the past three years, more than 150 law firm leaders – representing national independent firms (60 per cent), boutique firms (15 per cent) and international business law firms (17 per cent) predominantly from Asia, Europe, North America and South America – have completed the survey.

Notes to Editor

About the IBA Law Firm Management ESG Subcommittee

The IBA Law Firm Management ESG Subcommittee provides a platform for and contributes to the development of ESG strategies and policies within law firms. The subcommittee has 16 members from every continent who work closely with other IBA committees, ESG working groups and international legal networks.

Media Contacts

Robert van Beemen (vanbeemen@drbgroep.nl) – Co-Chair of the ESG Subcommittee

Nicky Sinker (nicky.sinker@auditel.co.uk) – Subcommittee member and responsible for the survey