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Another Indicator of the Growing Demand for ESG Investing

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Big Law firms are opening up environmental, social and governance practices, driven by priorities of the Biden administration and, increasingly, those of consumers and institutional investors.

This month, Gibson, Dunn & Crutcher announced its new ESG practice led by six partners in London, Los Angeles, Washington, D.C., and Dallas, Texas. On Tuesday, Seyfarth Shaw has formed its ESG group, comprised of 20 total attorneys and led by Chicago-based labor and employment attorney Ameena Majid, London-based international attorney Amy Levin, and San Francisco-based litigator Giovanna Ferrari. That same day, Hunton Andrews Kurth also announced its own group.

And on Wednesday, Orrick Herrington & Sutcliffe bolstered its existing group with the addition of Fenwick & West partner Ashley Walter, who will head the firm’s ESG practice.

ESG represents a range of nonfinancial factors that exhibit how a company acts toward its employees, vendors and consumers. ESG attorneys, for example, ensure that their clients abide by the U.S. Conflict Minerals Rule, a provision passed by Congress as part of the Dodd-Frank Act that requires public companies that use “conflict minerals” such as tin or gold to trace their supply chains and ensure that funds are not being directed to human rights abuses.

And what’s driving the recent growth among Big Law firms is twofold.

Similar to recent movement and growth among white-collar and state attorneys general practices, the Biden administration’s new priorities are driving up interest in ESG among corporations and, by extension, their outside counsel. The Biden administration and the U.S. Securities and Exchange Commission have all but promised to ramp up ESG disclosures, especially as it relates to climate change.

Earlier this month, the acting SEC Commissioner Allison Herren Lee hired Satyam Khanna to serve as a senior policy adviser for climate and ESG, where Khanna will “advise the agency on environmental, social, and governance matters and advance related new initiatives across its offices and divisions.”

Walter said he came to Orrick in part due to its strong energy practice, which he believes will come in handy with the Biden administration, especially if it begins to require public companies to make environmental disclosures, as some experts have predicted.

“Observers would say there will be a number of important topics in ESG,” Walter said. “But there’s questions about how important the ‘E’ will be.”

But ESG attorneys say that the increased attention into the area is also driven by consumers and institutional investors that are increasingly prioritizing the practice. Last week, BlackRock CEO Larry Fink told other companies and BlackRock clients that they must disclose business plans that will be compatible with a net-zero economy by 2050, a timeline set for in the Paris Climate Agreement.

Even before the pandemic, 52% of general counsel expected that they would need to ramp up their ESG efforts in 2020, according to the 2020 Chief Legal Officer’s Survey published by the Association of Corporate Counsel. And the definition of ESG is shifting to include not just the environment, but social justice as well.

“There is an expectation for CEOs to speak out on matters of social and environmental impact, whether that is Black Lives Matter, or AI or the equitable treatment of employees,” Claudia Toussaint, general counsel and chief sustainability officer of water supply technology company Xylem, told Corporate Counsel in January.

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