‘The best way for a forward-thinking law firm to make an impact in the field of environmental, social and governance (ESG) issues is by joining forces with its clients. While we are of course in the process of getting our own house in order, it is only by working with our clients that we can truly make a difference’, says Harm Kerstholt, partner and head of the Energy & Natural Resources Team. ‘Companies feel increasing pressure from stakeholders to act responsibly. Sustainable and responsible business conduct has become a top priority for boards and management. In this shifting landscape, we help our clients by mitigating ESG risks and identifying ESG opportunities. Regulations and legislation are just the tip of the iceberg. Soft law can be just as important for companies seeking to manage their legal and corporate affairs. We can help them by consistently asking not only whether something is legal but also if it’s the right thing to do.’
Sustainable Business & Climate Change Team
In 2020, we established a Sustainable Business & Climate Change Team, led partners Harm Kerstholt and Freerk Vermeulen. Previously, many of our lawyers were already advising clients on ESG-related matters. The team’s areas of expertise include ESG risks and opportunities, climate change litigation, sustainable finance, and business human rights law. Ensuring responsible and sustainable business conduct that meets ESG requirements has definitively moved beyond the sphere of reputational and stakeholder management to the legal realm.
It was therefore a logical step for us to combine our extensive knowledge and cross-sector experience in a single team. One concrete result is our ESG Opportunity Audit. We assess how ESG policies can help clients capture commercial opportunities and set themselves apart from the competition. Another area in which we are mindful of the legal importance of ESG is M&A. ESG due diligence can be an important means of assessing risks and opportunities in the field of responsible business conduct and climate change.
Relevant matters we have worked on include assisting De Volksbank with the issuance of EUR 500 million subordinated tier 2 bonds, the first time this type of green bond was issued by a bank in Europe. We also acted as transaction counsel for the first issuance of green and social bonds in Belgium by Cofinimmo, the first European REIT to issue such bonds. In the field of business human rights, we advised on the implications of the proposed Dutch Child Labour Due Diligence Act.
In addition, ESG as a key consideration for investors took centre stage in our advice to impact investor Invest-NL on the implementation of ESG clauses in joint financing agreements. In the energy sector, we have advised GOGLA, the industry organisation for off-grid energy solutions, on the updating of its ESG policies and Royal Dutch Shell on various matters relating to the implementation of a global access to energy project.
Relevant ESG trends
In our ESG practice, we have identified three relevant trends. First, most legislation so far, such as the Non-Financial Reporting Directive, focuses on Transparency. Transparency is key to all ESG obligations and plays a prominent role in our corporate governance work. Second, we see an increasing need for advice on climate risk responsibilities and reporting obligations in the financial sector. This is due to recent legislation such as the Sustainable Finance Disclosure Regulation and the Taxonomy Regulation.
This legislation will no doubt lead to additional information obligations for banks, investment funds and insurance companies regarding their corporate clients. Indeed, translating the consequences of these legislative obligations in the financial sector for our corporate clients is a top priority for us.
Third, ESG standards regarding what companies should do in the areas of sustainability and human rights are mainly enshrined in soft law, such as the UN Global Compact, the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.
However, soft law is increasingly giving rise to hard law and may lead to accountability for companies and their boards. Therefore, we are engaging more and more with our clients in order to discuss the implications of soft law for their business.
Sharing our knowledge
Taking into account these developments, we expect the role of in-house counsel in the field of ESG to expand in the coming years. This is one of the reasons why we share our knowledge and experience with general counsel through the ‘Jurist doet WAT’ network, an initiative to encourage the legal sector in the Netherlands to contribute to a more sustainable economy. Last year we also became a partner of MVO Nederland, with the objective of contributing to this network of over 2,000 ‘new economy’ entrepreneurs.
In addition, we regularly organise roundtables to discuss recent developments with clients. For instance, we hosted an event on developments in the hydrogen sector. At our 2019 Sustainability Seminar, we invited clients to share best practices with their peers. In 2020, we sent out an ESG survey through one of our international networks and shared the results with partners in more than 20 jurisdictions.