Environmental, social and governance (ESG) has gained increasing attention, particularly in the wake of the pandemic and the impetus to transition to a net zero world. Pressing social problems and the urgency of the climate emergency have resulted in important regulatory and structural shifts in markets, positioning ESG at the forefront.
By Elsa Tatam. Published 05 June 2023. Last updated 14 August 2023.
Our PGDL Student, Hannah Hughes interviewed Gilly Hutchinson, a lawyer at Linklaters. Gilly lives and works in Hong Kong SAR and leads on the firm’s ESG regional development in Asia. The discussions focused on the three pillars of ESG, advice given by ESG lawyers to clients on a day-to-day basis, and the importance for Linklaters of being a responsible and sustainable business.
What is your role at Linklaters regarding ESG?
I joined Linklaters as a trainee and worked as an energy and infrastructure lawyer in London before moving to work for the UK government’s Department of Energy and Climate Change, as it was known then. I always wanted to live in Asia and an opportunity came up to work for a law firm in Hong Kong so I moved to Asia 12 years ago and have had a great time working in the region.
Over the last few years, ESG awareness has increased in Asian markets and the pace of change is expected to continue to gain momentum. My position is a dedicated ESG role in the region, to effectively respond to the increasing client demand for discussions and support on ESG issues and for ESG-related advice.
Why are businesses so focused on ESG?
From the net zero transition and sustainable finance to human rights issues in supply chains and understanding corporate purpose, it is crucial to grasp the broad ESG landscape and direction of travel. For businesses of all types, the challenge is how to integrate ESG considerations into day-to-day business whilst transforming aspirations and targets into robust, realisable action plans – certainly no small task.
In your job at Linklaters, how do you advise on ESG?
We essentially advise clients on a range of ESG issues from the net zero transition and sustainable finance to human rights issues in supply chains.
In terms of the “E” pillar, our energy and infrastructure lawyers advise on “energy transition” projects, for example, on renewables projects and emerging technologies such as battery storage or green hydrogen.
For our corporate and transactional lawyers, heightened scrutiny of ESG issues is having a marked impact on transactions, in particular climate-related issues. Increasing numbers of transactions are being driven by ESG considerations, and businesses are having to work out how best to integrate ESG into the existing transactional ecosystem, including how greenhouse gas (GHG) emissions and other ESG factors are allocated.
Can you break down the meaning of ‘ESG’?
When talking about ESG, specifically in Asia, the focus has been predominately on the “E” but the focus on the “S” in ESG is set to increase. Issues range from workplace culture, the importance of diversity and inclusion, the heightened awareness of workplace rights, human rights issues in supply chains, workplace activism and employee relations more generally.
“S” issues are increasingly becoming part of regulatory and governance frameworks as structural and disclosure obligations continue to evolve; and the importance of ensuring that any climate transition is a just one is now clear.
Meanwhile, “G” issues (Governance) are critical for successfully delivering climate transition strategies. To manage ESG risks and impacts and take advantage of net zero transition opportunities, organisations need a clear purpose, aligned with their values, strategy, and culture. Good governance and a healthy corporate culture, with accountable leadership, are the ‘glue’ that holds the ‘E’ and the ‘S’ in ESG together.
There is an increasing demand for ESG data – reporting information on environmental stewardship, social responsibility, and corporate governance. How important is data and metrics in supporting ESG strategy today?
Data is crucial. Policymakers have decided that the best way to bring about change quickly is to use the financial system. Policy initiatives are designed to encourage the reallocation of capital away from carbon-intensive or unsustainable activities to more sustainable ones. We are seeing regulation on ESG multiplying exponentially, particularly in the EU and UK but also in other markets around the world, like here in Asia. Furthermore, we are seeing governments and regulators pushing forward with an ongoing rollout of sustainable finance disclosure regulations.
Disclosure regimes are a key policy tool for regulators. They are designed to ensure that we have access to robust, quality, and comparable information about sustainability risks and impacts. That information supports better allocation of capital to more sustainable economic activities.
What are the highs and lows of the job?
In terms of the highs, ESG is incredibly interesting. It’s something I feel passionate about and it’s fantastic to be able to support clients on their ESG journey. The topic is currently surrounded by a lot of energy and is front of mind businesses, which makes it more exciting. It can, of course, be difficult reading all the scientific reports on climate change, but equally when you hear of the incredible technological innovations and pioneering success stories in climate change mitigation, it is encouraging.
ESG has emerged as a crucial instrument for all organisations, including Linklaters. What does ESG mean to Linklaters as a firm? How do you foster a better world for your employees and communities around the world?
Responsibility and sustainability are at the heart of how we operate as a business. Our people, our clients and wider society have growing expectations of our firm and expect us to make the right choices when it comes to being a responsible and sustainable business.
Diversity, equity, and inclusion are the pulse of our firm. We are committed to using our position as a global business to create fairer systems and a more inclusive culture within our firm and beyond. Our people should be safe at work, fairly rewarded and supported in their health and well-being.
Our social impact work is about empowering people around the world and helping them to transform their lives. We achieve this by drawing on our skills and capabilities, investing over £10m worth of resources every year through providing pro bono legal assistance, and donating our funds and our time in our communities. Our people devote hundreds of hours of pro bono work to organisations with an environmental or sustainability focus each year.
Do you have any takeaways for a student considering a career in ESG and sustainability?
All lawyers need to be ESG lawyers in one form or another. But my main piece of advice is: choose an area of law or career you feel inspired by.
Interested in Environmental Law? See our LLM Environmental Law page on our website to find out more.
