February 13, 2022
Conversations about environmental, social, and governance (ESG) issues have ramped up in the business community over the past few years with environmental issues, worker health and safety, and other challenges infiltrating board agendas everywhere. But how can boards truly “ritualize,” or integrate, ESG objectives into their businesses? Enter Dave Curran, cochair of the Sustainability and Environmental, Social, and Governance Advisory Practice at Paul, Weiss and the executive director of the ESG and Law Institute, who discussed this and other topics with NACD senior editor Mandy Wright in a recent interview for the Private Company Directorship newsletter. Select questions and answers from the interview are included below.
The board is uniquely qualified here. They're not involved in the day-to-day management of the company. One way is to pressure test and challenge the information that they're getting from management. Boards are only as good as the data they receive from management. They don't make their own data. They should have skepticism, in a nice way, in a constructive way.
The other thing is to get educated—and the board needs to do this rapidly. There's so much free information for boards to better understand the E, S, and G mechanisms.
I've been focused on the interface of technology and law and corporate secretaries for years, but it's a huge component. You need technology tools and platforms; tracking, measuring, monitoring, reporting—that's all technology. If you’re involved in environmental issues, you need technology to sort through the data to understand what's important, what's not important. You need to be able to report, you need to be able to have a workflow. All that is technology.
There's a whole slew of technology companies growing up now in this space where ESG intersects with law and compliance.… AI is going to be very, very important here. There can be misuses of AI. You're only as good as the data you have. And boards can only act on the data that they have.
I call it “moving from ribbon cutting to ritual.” Instead of making it a ribbon cutting experience, like when a circus comes to town, it should be an important business objective for the company. What do we do with important business objectives? We document them, we budget for them, we put great talent on them. Then we track, measure, and monitor progress. One of the reasons why ESG has been allowed to slip and slide all these years is that some of it is hard to quantify. But hard to quantify doesn't mean it's not important. It just means it's hard to quantify.
The prominence of lawyers and the general counsel has gone from zero to 100 miles an hour in the last 18 months to two years. They've always been strategic counselors, but much more transactional. General counsel typically control what the board sees; they're often the corporate secretaries, an incredibly important pivot position and information flow position. Lawyers are really leaning into this. They're getting educated. They have a unique way of helping the board and board members understand how their business relates to governance. They do the minutes, the charters, determine what boards are looking at, what they're not looking at. It's a hugely important role, and it's exciting to see so many lawyers embracing this now and recognizing that it is their lane of travel.
This is not human resources’ job exclusively. This is not the head of sustainability’s job exclusively. It is in fact the general counsel's job. They're the ones that defend and protect the company's reputation and are arguably the fiduciaries for the sustainable nature of businesses because they have to take a long-term view. They also understand interactions with government agencies, regulators, litigators, and activist investors. They are the ones that need the 360-degree view.
The exciting news is we're seeing that changing very rapidly. Lawyers are understanding their role, boards are wanting them to be involved, and it's a nice mutual system today. Not perfect, but it's on the right trajectory.