Blog Post for Cyan Partners

Why your Law Firm needs a Chief Sustainability Officer and how to find the best person for the job.

It’s no secret that law firms are behind the rest of the corporate sector in tackling key environmental, social, and governance (ESG) issues. While their clients have been measuring their carbon footprints, setting emission-reduction targets, investigating supply chain abuses, and creating inclusive workplaces, most law firms have fallen short on all ESG fronts. It should come as no surprise that a recent study found only 32% of clients felt their firms were genuinely committed to ESG, with partners often unable to properly articulate their firm’s responsible business efforts.

The lack of action and effective communication around ESG issues has reached a tipping point: firms are starting to lose clients and employees. It’s time for firms to realise they are not immune to the external and internal pressures to conduct their business in a more conscious way.

In 2021, we wrote about how General Counsel in law firms need to take more of a lead on ESG and sustainability, which is happening in some firms, but it’s also true that a more universal approach is needed. ESG issues are starting to play a strategic role even within law firms, and they can no longer be viewed through the prism of compliance alone.

Law firms need to follow suit with the corporate world and seriously consider appointing a Chief Sustainability Officer (CSO) to steer their firm’s strategy and vision on sustainability. In this post, we look at what the CSO role involves, why it’s necessary in law firms, and how to find the best candidate.

What is a CSO?

There can be confusion about what differentiates a CSO from the myriad of other senior ESG roles out there. It’s not uncommon to see a Head of Sustainability, a Sustainable Operations Manager, or even a Sustainability Manager in many corporate organisations. In law firms, it’s typical to find an ESG Partner who manages their day-to-day legal practice with additional ESG-related responsibilities. Despite these trends and existing roles, there are certain characteristics that make the CSO function unique and distinct.

First, as the title suggests, the CSO belongs in the C-Suite, i.e., the top decision-making and strategy-driving organ of the business. As some commentators have noted, the CSO actively works alongside other key C-Suite executives, especially the CEO and CFO, and helps educate board members on the relationship between sustainability and the firm’s value creation.

The CSO’s involvement in the senior echelons of the business allows for sustainability and ESG issues to occupy front and centre stage in senior decision-making and when it comes to setting strategy. Others have also emphasised the importance of the CSO in coaching decision-makers on how to manage difficult trade-offs between increasing profitability and complying with ESG requirements.

It’s not always the case that the right thing to do will also be good for business and the CSO plays a key role in helping other executives cope with the immense challenge of balancing these pressures.

The CSO is best placed to explain the company’s ESG performance and commitments to key stakeholders, such as clients, but also to lenders and investors who are increasingly starting to integrate ESG considerations into their financing and investment decisions.

The CSO and CFO are two sides of the same coin: the CFO knows about the business’ financial performance and state of health, but it is the CSO who understands the sustainability risk profile and is actively involved in data collection and analysis for ESG reporting purposes, ensuring regulatory compliance, and implementing sustainability projects, as well as benchmarking the company’s performance against industry peers.

Investors are increasingly demanding the kind of information that only a CSO is truly competent to provide.

Finally, the CSO acts as the catalyst for change. They help the business navigate the constantly evolving external landscape, which has earned them the title of “sense-maker in chief”.

The CSO acts as the educator, plugging knowledge gaps through training, lateral hires, and knowledge sharing. They are responsible for defining and communicating the firm’s sustainability purpose and goals and promoting behavioural and mindset shifts.

They know that cultural change is frequently not brought about by an avalanche of policies and processes all happening at the same time. They are skilled at prioritising where the firm’s ESG focus should be at any given time, and at focusing attention and resources to achieve sustainable and substantive long-term changes.

Why do law firms need a CSO?

Gone are the days of the traditional law firm partnership model dominating the industry. Most large firms now operate as limited companies, along with many mid-tier and progressive SME firms. It makes sense that law firms have adopted C-Suite functions that are evolving in other corporate sectors, including the role of CSO.

It's not a question of blindly following the path of other industries and creating yet another powerful-sounding executive role just for the sake of it. There are pressing reasons why law firms must get serious about committing to the types of internal transformations that only a CSO can bring.

Research has found that one of the main drivers for hiring a CSO is when the external environment in which a company operates starts to change more quickly than it can keep up with. This is certainly true of the legal sector.

Industry commentators predict that under growing pressure from clients to verify the ESG credentials of their value chains, law firms must also start complying with ESG reporting requirements. They are, after all, their clients’ vendors and suppliers.

ESG reporting frameworks and benchmarks are emerging specifically for the legal industry, and various independent bodies have started monitoring firms’ performance on key ESG issues (see the work being done by Law Students for Climate Accountability).

Pressure is also mounting from the Law Society. Its April 2023 Climate Change Guidance set clear expectations for law firms to monitor and reduce carbon emissions, engage in transparent reporting, and reduce their advised emissions by helping clients achieve net zero.

The guidance goes as far as to suggest that law firms should consider turning down instructions to act where this would conflict with their own climate commitments and net zero transition goals.

The new context in which law firms operate no doubt requires difficult conversations on the necessary trade-offs between a firm’s ESG commitments and its bottom line. A skilled and experienced CSO can help a law firm navigate these external pressures.

Intensifying stakeholder scrutiny and expectations is another common reason for hiring a CSO to develop new structures and processes for improving a company’s sustainability performance. Again, this couldn’t be more true for the legal industry’s current situation.

In 2021, a study by the Law Firm Sustainability Network found that 87% of responding law firms had been asked for proposals that included their firm’s environmental efforts when pitching to prospective clients. Consultants Lamp House Strategy found that 51% of law firm clients asked their firms to report on specific ESG metrics.

It’s not only clients who are demanding better ESG performance from law firms but also their employees and prospective hires. Earlier this year, KPMG found that 30% of 6,000 job candidates surveyed had researched a company’s ESG credentials before applying for a job. Law firms specialising in climate change and impact litigation are aggressively recruiting so-called “climate quitters” from corporate law firms. In current market conditions where law firms are struggling to find and retain talent, it is imperative they demonstrate their commitment to responsible business conduct.

A CSO can ensure the firm’s ESG efforts are being accurately and compellingly communicated to all stakeholders.
Finally, ESG issues are increasingly taking on a strategic character and affecting law firms’ financial performance. Firms must factor in relevant ESG considerations when assessing business risks and opportunities.

As one commentator put it: “sustainability will soon be a requirement as opposed to a philanthropic afterthought” in law firms. CSOs can help firms understand and mitigate the ESG issues that risk adversely impacting on their profitability.

What should you look out for when recruiting a CSO?

With so much responsibility on their shoulders, you would be forgiven for thinking that CSOs require superhuman attributes. While we wouldn’t recommend including this in the job description, there certainly are qualities that a successful CSO should possess.

A CSO needs outstanding people skills with the ability to influence, persuade, collaborate and connect with people across the entire organisation. They must be able to raise awareness of ESG risks and repercussions in a clear and relatable way, which compels people to act instead of alienating them.

It goes without saying that excellent communication skills are a must, but the best CSOs are also perceptive and know which of their multiple personas of leader and influencer, educator and facilitator, or innovator and disruptor are appropriate in each situation.

Last but not least, a CSO must be able to understand how a firm operates, its services, and the wider industry so that they can effectively anticipate ESG risks. A good CSO will also have excellent project management and team leadership skills and will constantly be drawing on the knowledge and expertise of a range of people in this complex and challenging field.

At Cyan Partners, we have decades of experience in recruiting for senior positions in the legal industry. We are passionate about sustainability and with our unique partnership with Pro ESG Lawyers we’re well placed to help you to find the right people for CSO and other sustainability roles; we are constantly talking to people who want to use their legal and professional experience in this developing and important field. Please contact us today to discover how we can help you navigate the ESG-related challenges and opportunities that lie ahead.