ESG seems to have become the latest cause célèbre among conservatives targeting Big Law firms.
On November 3, five Republican senators — Marsha Blackburn (TN), Tom Cotton (AR), Chuck Grassley (IA), Michael Lee (UT), and Marco Rubio (FL) — sent a letter to at least 30 major law firms regarding the advice they provide clients on environment, social, and corporate governance (ESG) efforts, telling the firms they had a “duty” to make clients aware of the risks of “participating in climate cartels and other ill-advised ESG schemes.” Otherwise, Congress would use “its oversight powers to scrutinize the institutionalized antitrust violations being committed in the name of ESG.”
In the letter, the senators said ESG is part of “the collusive effort to restrict the supply of coal, oil, and gas, which is driving up energy costs across the globe and empowering America’s adversaries abroad.”
Conservatives are also targeting the social factor in ESG when it comes to abortion coverage.
Recently, discrimination investigations were initiated against companies that provide employees with abortion travel expenses by the Equal Employment Opportunity Commission’s (EEOC) Andrea Lucas, who was appointed a commissioner by former President Donald Trump.
In addition, in July Sidley Austin was singled out by the Texas Freedom Caucus for its coverage of out-of-state abortion services. In another letter, this one addressed to the chair of Sidley Austin’s management committee, Yvette Ostolaza, the Caucus very bluntly accused the firm of providing funding for employees to “murder their unborn children.”
While all of these warnings are more than likely “mostly political pageantry and grandstanding” on the part of conservatives, according to Alison Taylor, an ESG expert and the Executive Director of the Ethical System program at the New York University Stern School of Business, they may in fact have real consequences on the legal field, as they can be used as cover by management that is already hostile, or just indifferent, to ESG measures or reproductive rights.
“Corporations that don’t want to move forward with climate initiatives will use this as a weapon,” said Steven Harper, former partner at Kirkland & Ellis. “It allows lawyers, who are cautious by nature, to advise clients to hold back.”
However, it’s not as though lawyers can simply tell their clients to simply ignore ESG issues.
“Every big business at least pays lip service to ESG today, even Big Oil,” Taylor said. “Companies need advice . . . not least because issues like climate change and human rights are becoming much more regulated, especially by the EU, but also by the U.S.”
And the ESG advice provided by firms is ultimately aimed at mitigating litigation risk for the companies they advise. “You are much more likely to get sued in class actions over climate change,” Taylor said, “or for undermining your stated commitments to human rights.”
It seems Big Law firms recognize that their primary responsibility remains to their clients. As one partner whose firm was targeted by the five senators said, the letter is a “political stunt” and would have “no impact on how we handle our ESG work.”