Increasingly, businesses are expected to act as responsible corporate citizens.
On the basis of prospective EU legislation, companies will be required to identify, address and report in relation to the impact of their business’ activities on, for example, the environment and on human rights. Ahead of ESG due diligence becoming a mandatory obligation, it is evolving into a market wide best practice.
ESG performance is becoming a point of focus in the selection of business partners - in the context of an investment, a transaction or an important contract. Performing a legal ESG due diligence on a target company or potential business partner can be of key value. It is equally important to be aware of your own ESG performance and to understand the ESG performance of your value chain.
Legislation is developing in this area as well, most notably with the European ESG Due Diligence Directive.
It is therefore important to ask yourself new types of questions:
- How do I score on ESG?
- How would potential partners look at my business from an ESG perspective?
- How does my supply chain perform on ESG? What are my options to influence this?
- How do you make sure that your ESG ambitions are reflected effectively?
- Going forward: what are my core focus points on ESG when entering into a new partnership or contemplating a new transaction?
- How does your envisaged partner score on ESG?
- Do you know how your target values human rights in its supply chain?
- And what are the legal implications? How do ESG questions translate into legal topics and solutions?
This translates into the following legal tools
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ESG Audit
In an ESG Audit, we map the regulatory requirements and case law, set out how and when ESG regulation applies and provide guidance on compliance and litigation risks. With this, we tailor the scope to the needs and priorities of the individual client. An extensive audit can encompass governance, litigation and reporting as well as contracting aspects.
Our team of experts can:
- Review sustainability governance - this includes a review of corporate documents, your company’s disclosures and other relevant documentation and interviews with key function holders
- Perform an ESG related gap analysis on corporate reporting: Corporate Sustainability Reporting Directive (CSRD), annual report and Corporate Governance Code
- Review and assist in drafting mandatory and voluntary disclosures
- Review risk allocation and responsibility regarding ESG issues in contracts
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ESG Due Diligence in M&A transactions or investments
ESG Due Diligence provides an overview of how the target’s ESG performance rates against the applicable legal framework, including future regulation and soft law. Our ESG Due Diligence is aimed at determining whether, from a legal perspective, the target company is subject to ESG-related risks. It covers the E, the S and the G; enabling companies to include non-financial considerations and legal implications in their decision making.
Our team of experts can:
- Assess the target’s ESG policy
- Review liability and reputation risks resulting from ESG non-compliance, human rights infringements, and climate change mitigation measures
- Assess the extent to which the board weighs non-financial considerations in investment decisions
- Advise on integrity risk management, including anti-money laundering (AML) compliance, corruption, internal processes, safe working environment, harassment, social risks and other elements regarding supply chain management
- Review non-financial disclosures and associated risks around (potential) greenwashing and misleading ESG claims
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CSDDD advice and contract review
The Corporate Sustainability Due Diligence Directive (CSDDD) aims to foster sustainable and responsible corporate behaviour throughout global value chains. Our Corporate Governance team advises clients on how the directive applies to their chain of activities, as part of an ESG Audit or as a separate legal service. Our Contract team assists clients in implementing their ESG strategy and incorporating CSDDD requirements into material contracts.
Our team of experts can:
- Advise on the application and scope of the due diligence obligations
- Advise on potential litigation risks and protection against CSDDD-based claims
- Review contracts with partners and suppliers to align agreements with CSDDD obligations
- Draft and adjust partner and supplier contracts for compliance with ESG strategy and CSDDD compliance
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ESG and governance
The governance structure plays an important role in implementing ESG strategies. By actively promoting sustainability goals and accounting for ESG issues, companies build stakeholder engagement and trust, and show social and environmental accountability. Factors such as board expertise and independence, shareholder rights and leadership effectiveness throughout the company’s operations are critical to success. The 2022 Dutch Corporate Governance Code regards an ESG strategy as part of a vision of long-term value creation.
Our team of experts can:
- Advise on the solid integration of ESG in corporate governance
- Advise on developments in corporate governance and ESG requirements
- Provide ESG training for board members and the organisation
