With corporates across the world increasingly adopting sustainability as part of their business practices, law firms can’t afford to fall far behind.
Data collated by Managing IP’s sister research brands, including IFLR1000, revealed corporates want to work with firms that demonstrate a strong knowledge of ESG issues and are mindful about how their actions affect society at large.
In-house intellectual property counsel, during subsequent conversations with Managing IP, confirmed that ESG is slowly but gradually moving up their priority lists as well.
Sources said they may not want to work with law firms that do not demonstrate any appreciation of ESG ideals.
Geoff White, chief IP counsel at coating services company SilcoTek in the US, said: “We do not have any formal considerations for ESG, but we would not hire counsel that we felt violated such efforts.”
White noted that in-house counsel must ensure that all their decisions are based on what will make their organisations excel in the future, adding: “Socially driven concepts such as ESG are very important for an organisation to thrive, both from branding as well as compliance perspectives.”
ESG compliance may not be at the top of in-house counsel checklists yet, but it can help law firms stay ahead of their competitors.
Joseph Kucera, director of IP strategy at Pure Storage, said ESG compliance of potential law firm partners isn’t the first thing he looks for as an in-house counsel. However, he added: “If all other factors on the basis of which we were judging a list of potential external counsel were equal, then ESG will absolutely matter.”
A Seattle-based counsel at a food and beverages company put an even stricter emphasis on ESG, saying that his organisation prefers to work with firms that can demonstrate at least some positive social and sustainability initiatives.
In recent years, Europe has introduced a horde of ESG regulations and restrictions, and the US is expected to follow suit soon.
It’s likely that businesses, including IP-centric ones, will inevitably start taking ESG ideals and compliance even more seriously in the near future.
External counsel who share those values will be well-placed to beat the competition.
Regional
The survey covered views of in-house counsel from APAC, EMEA and the Americas. Of survey participants from APAC, 37% indicated that ESG is important to them, followed by 36% in EMEA. The percentage for the Americas is slightly lower, at 34%.
Only 7% of the participants in the Americas and EMEA indicated ESG isn’t important, followed by APAC at 6%.
Overall, across all surveyed research brands, APAC counsel expressed the most interest in ESG, with a mean score of 65.52%. The scores for the Americas and EMEA were nearly identical, at 64.2% and 64% respectively.
Global revenue
In terms of corporate global revenues, ESG initiatives are seen as crucial by companies with higher earnings. Of companies with $5 billion or more and $500 million to $4.99 billion, 37% said ESG initiatives are important to them. For companies with $50 million to $499.9 million and less than $50 million, the percentages stand at 35% and 34% respectively.
Of the companies surveyed, only 7% of those in the top two financial brackets said ESG initiatives of prospective partner firms are unimportant. The proportion was marginally higher, at 8% each, for the lower two brackets.
The mean scores, calculated based on responses received across all research brands, revealed a contrasting trend. Respondents at companies with less than $50 million in global revenues, which was the lowest financial bracket surveyed, showed the most interest in ESG at 65.5%. This could mean that companies with considerable turnovers in the financial sector are more interested in ESG than their peers in other sectors.
Industry
Among the sectors that the corporate participants belonged to, those in advanced manufacturing expressed more interest than others in ESG, with 41% saying they found such initiatives important. The next biggest backers were automotive and transportation, power and utilities, and telecoms, with 39% of participants from all three sectors saying ESG initiatives are important. The professional services sector also showed high interest, at 37%.
The technology sector led the groups that said ESG initiatives are unimportant, albeit with only 10% of respondents expressing such an opinion. The financial services sector followed at 8%; and consumer; power and utilities; professional services; and telecoms companies trailed slightly behind at 7% each.
Overall, across all the surveyed research brands, the power and utilities and advanced manufacturing sectors expressed the highest interest, with mean scores of 67.7% and 67.1% respectively.
Practice area
Across the practice areas surveyed, 36% of financial and corporate law survey participants said ESG initiatives are important, followed by 30% of litigation survey participants. Only 10% of litigation and 7% of financial and corporate law respondents said ESG initiatives are unimportant.
Financial and corporate law survey participants showed significant interest with a mean score of 64.5%, followed by litigation at 58.2%.
Methodology
Through our primary research with in-house counsel representatives, we ask them to rate a range of attributes and their importance in decision-making when selecting outside counsel.
We have aggregated the responses from our practice area-specific surveys in 2022 and 2023 and analysed the results in this report series. The data highlights the extent to which in-house counsels’ views on these attributes differ between industries, regions, revenue sizes and practice areas.
In total we have analysed responses from over 25,000 in-house counsel respondents over the two-year period.
To read the previous instalment of What Corporates Want, click here.
