Ulysses Smith, ESG senior advisor at Debevoise & Plimpton, highlights the ESG trends that companies are most concerned about at the moment, as part of a series of interviews with the authors and editors of Global Legal Post’s Law Over Borders comparative guides. Ulysses is the editor of the ESG guide.

What are the top three ESG trends people are most focused on at the moment? 

“The world of ESG is becoming a space governed much more significantly by hard law. Not that long ago, we lived in a world where ESG was about voluntary principles and frameworks – such as the UN’s guiding principles on business and human rights or the principles for responsible investment – and negotiated undertakings in contracts. Now we are rapidly moving to a place governed by hard law, so soft law to hard law is the transition, and that really changes things for corporates and financial institutions. An organisation may have already been very engaged on ESG, but when you shift to a world where there are legal and regulatory requirements, and therefore risks of non-compliance and all that comes with them, that is a transformative driver.

“Another trend is just the fundamental worsening of the realities that underlie ESG – climate change and the natural disasters it spawns, biodiversity loss, social and racial injustice, poor governance. Companies are increasingly exposed to those realities, and regardless of the politics or the trends of a given moment, those realities will influence business behaviour.

“Third is the politicisation of ESG, particularly in the US, which obviously makes things very complex for businesses, many of whom may want to be proactive and forward leaning on the issues that matter to them related to ESG. But now they’re in a position where, if they’re out front on these issues, they might be exposed to political attacks or become subject to investigations. The result is a new caution that has entered the space around ESG.”

What ESG-related advice is most in-demand from clients?

“The wave of regulation is coming from many directions – Europe, the US, Asia, Latin America – and it has layers of complexity. Just focusing on the major European regulation right now, the Corporate Sustainability Reporting Directive or CSRD, has many dimensions to it and many different triggers that could bring companies, European and non-European, within scope. I think this regulation isn’t really on many companies’ radar yet, and for many who are aware of it, there’s a challenge in understanding how they apply to them. Much of what we are doing now is helping clients get their heads around this new regulated environment, what compliance means and what good governance means in this new landscape.”

What are likely to be the biggest ESG-related legal threats businesses face in the future?

“A big area of concern now is around greenwashing and really making sure that what you say you’re doing, or how you present yourself on ESG issues, is reflective of reality. Making sure you don’t overstate what you do or over-promise on your commitments in your regulatory filings or public statements.

“There’s a lot of focus on sustainability advertising and misleading statements in ads. The new laws and regulations around ESG require disclosures and regulatory filings and that information will be scrutinised not just by regulators but also environmental and shareholder activists. So the risk is going to increase.”

Find out how key jurisdictions are responding to the ESG movement. Click here to read the Law Over Borders ESG comparative guide

Get to know Ulysses...

What are you doing personally to become more sustainable?

“These are such systemic, huge challenges – climate change, racial injustice and so on – what can individual decisions really do? But I am of the view that the accumulation of millions of good, sustainable individual decisions can actually amount to something that has real impact. So I try to be mindful and deliberate about the choices that I make.

“I love meat – a good steak is one of the most delicious things you can eat – but I recognise that the climate impact of that is off the charts so I try to eat vegan, two meals a day, every day of the week, and then have some fish or chicken for dinner. My wife and I also drive an electric vehicle, and try to be thoughtful about our travel, so we try to be mindful about the way we get around and vacation.

“Maybe most importantly, we have young-ish kids and so we really try to make them understand the broader significance of the choices they make and the real impact that they have in the world. And so really educate them to be even more thoughtful from an earlier point in their lives about how actually those individual decisions that they make can really make a difference.”

Did you take up any new hobbies during lockdown and are you still doing them?

“For so many people a predominant aspect of pandemic life was just the surge in the increase of screens in our lives. So one of the things that we tried to do was have more analogue experiences. We created what we called our tech Sabbath Sunday, which meant that Sunday was a day free from as much technology as possible – but absolutely no screens. So reading books and magazines and newspapers, playing physical games like Scrabble and other board games, listening to albums on a turntable and not relying on Spotify or digital music. We’ve definitely slid on that – the kids are older and their expectations are a bit different, but we’ve been talking about bringing back the tech Sabbath.”

If you weren’t practising law, what would you be doing?

“Probably diplomacy or journalism. I worked as a journalist before law school at the Chicago Reader. I think those two are career paths where my interests and skill sets align, so I probably would have gone into the US Foreign Service or something like that, or journalism.”

The GLP Law Over Borders ESG comparative guide is edited by Ulysses Smith, of Debevoise & Plimpton, and features contributions from leading law firms including: Bruchou & Funes de Rioja (Argentina), McKinney Bancroft & Hughes (Bahamas), Pinheiro Neto Advogados (Brazil), Carolina Queiroga Nogueira (Chile), Zhong Lun Law Firm (China), Debevoise & Plimpton (EU , Germany and US), Hannes Snellman Attorneys (Finland), Legance (Italy), City-Yuwa Partners (Japan), Von Wobeser y Sierra (Mexico), De Brauw Blackstone Westbroek (Netherlands), Rodrigo, Elías & Medrano (Peru), Kim & Chang (South Korea), Hannes Snellman Attorneys (Sweden), MME Legal (Switzerland), and Herbert Smith Freehills (UK).

For further information about the Law Over Borders comparative guides email associate publisher [email protected].