Being a Trusted Advisor in a Re-imagined Role for Business | Baker Donelson

In a recent program on the Harvard Business School campus on September 15, 2022, more than 1,000 leaders and stakeholders from across industries and interest groups participated in a forum aimed at raising awareness, fostering collaboration and asking important questions to answer the growing acceptance of environmental, social and governance (ESG) metrics as new tools for corporate governance. Speakers and panel discussions included some of the most important leaders from around the world, including the Chairman of the SEC; CEO of the London Stock Exchange; Microsoft CEO and Chairman; President of the Environmental Defense Fund; President and Director-Advisor Emeritus, NAACP Legal Defense Fund; and CEO of Business Roundtable – the list goes on and on.

For the lawyers in attendance, several inescapable conclusions emerged from both the plenary sessions and the focused, thematic working groups that took place throughout the day.

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First, the ‘new era’ of corporate governance faces a spectrum of complicated issues that depart from the purely traditional ‘profit-oriented’ fiduciary duties. These issues require trusted advisors to help leaders guide through legal requirements when they are willing to find creative legal solutions that enable businesses to serve the interests of a broader community.

Second, the legal community is lagging behind in adapting its own traditional legal structures and corporate models to provide broader strategic-level advice on issues such as global sustainability and to formally incorporate ESG factors for compliance, goodwill and social justice.

Third, business and legal communities in Europe and other parts of the world have embraced this reimagined role, and this acceptance and impact on global markets makes change in the United States almost inevitable.

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Fourth, significant debate remains about the role of government in relation to these factors. The emergence of the SEC’s role and the evolution of its ESG task force, as discussed in this recent article, “The SEC’s Climate and ESG Task Force; What it Means for Public Companies” is an example of how the role of government might evolve. However, in the historically free nature of a capitalist market like the United States, there is a competing notion of letting consumer and community demand shape this behavior over time, rather than through government mandates. This debate and ultimate balancing act is sure to continue for the foreseeable future, and there is an ongoing need for trusted advisors to companies for both legal and public interests.

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Finally, as with any growing region, there is a risk that companies will abuse the system and exploit the good intentions of other companies, consumers and interest groups for their own political or economic ends. Businesses must be able to rely on trusted advisors as watchdogs to avoid risk while meeting their obligations.

As these new realities illustrate, companies need more than an attorney who can “break in” in an emergency to navigate this evolving legal landscape. To be effective as trusted advisors, attorneys must be prepared to advise on a broader range of concerns than “legitimate or not” and develop an understanding of the broader goals that ESG metrics are intended to advance.


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