Why having the legal/compliance department in charge of ESG is problematic

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There’s a paywall from this Law.com article entitled “‘Seismic Shift’: Top Brass Increasingly Craft ESG Strategy, Taking Reins From Legal Departments” – but you get the idea.

Furthering that notion, here’s a note from Alison Taylor:

I often read articles about how ESG is becoming regulated and in the purview of legal and compliance teams, and I wonder why no one talks in detail about the internal governance challenges this poses. This is no exception.

This article (which is perfectly fine, don’t get me wrong) spends time on how a corporate legal team uses generative AI to keep on top of the fraught regulatory landscape, and talks of greenwashing, competing objectives and rising workloads.

It spends *no time* on how these developments upend legacy notions of sustainability as good corporate citizenship and going “beyond compliance”.

It spends *no time* on rising employee demands and activism, which legal teams are probably not best placed to respond to.

It spends *no time* on how marketing claims and sustainability claims can no longer be treated separately, even though the recent Target and BudLight drama makes it clear that they can’t.

It spends *no time* on the respective oversight and reporting lines of these departments.

And it makes no attempt to close the gap between the cacophony of voices arguing that ESG is all about alpha, and this contrasting view that this is just the latest on the expanding task list of general counsels and compliance officers. Might we even *try* to connect this with the rest of the discourse on risk management, value creation and how to link the two?

Also curiously absent: any discussion of ethics. Which would be a helpful addition, given that the entire problem facing corporations is that the public is upset about lack of accountability for negative externalities, the way corporations treat their workers, etc etc etc. Hand waving about the need not to be “ideological” is everywhere, but this is not the same thing.

No wonder so many company leaders are confused about what to do with all this.