ESG is the gaining traction in Australia with institutions focussing on ESG factors to achieve country’s net zero goal.
What is ESG?
Thomson Reuters defines ESG as an umbrella term for a broad range of environmental, social and governance factors that entities consider when making decisions and against which investors, consumers and other stakeholders can assess the standards of a corporation or other entity.
Why is ESG crucial?
Australia has taken significant steps towards aligning institutions with the country’s net zero trajectories and improving climate action by amending 16 Acts.
One significant milestone was the passing of the Climate Change Act 2022 by the Australian Parliament on 8 September 2022. This Act establishes ambitious targets for Australia to reduce emissions by 43% from 2005 levels by 2030 and achieve net zero emissions by 2050. This sends a clear message to the private sector that Australia is committed to renewable energy and is open for business.
The Climate Change (Consequential Amendments) Act 2022 changed 14 other Acts to align government institutions with these emission reduction targets. Further amendments were also introduced to two additional Acts throughout the year to ensure the alignment of public institutions with the net zero trajectories.
These amendments demonstrate the Australian government’s commitment to tackling climate change and promoting sustainable practices across various sectors. It underscores the importance of Environmental, Social, and Governance (ESG) considerations in the country’s policy framework. It highlights the critical role of ESG in driving positive environmental outcomes and sustainable business practices.
5 Essential ESG Tips and Insights for Lawyers by Thomson Reuters
Lawyers must be proactive in staying up-to-date with ESG developments and help implement them in their daily operations. Here are five key pieces of advice from Thomson Reuters that could help Lawyers stay ahead of the competition.
1. Stay Informed on ESG Developments
Fundamental developments are taking place in the Environmental, Social and Governance sectors. To provide clients with accurate advice, lawyers must stay up to date on the most recent guidelines and regulations.
2. Evaluate and Manage Legal Risks
Identify potential risks so that you are able to better evaluate and manage any unforeseen implications concerning ESG issues. It will also help safeguard your clients’ interests. Furthermore, this ensures compliance with pertinent regulations.
3. Incorporate ESG Clauses in Contracts
It is recommended that you assist clients in drafting and reviewing contracts to ensure that Environmental, Social, and Governance (ESG) standards are effectively defined, incorporated, and upheld across their supply chain. This ensures these standards are clearly articulated and maintained throughout the contractual agreements. Therefore, emphasising ESG considerations’ significance in your clients’ business operations.
4. Conduct Thorough ESG Due Diligence
Perform due diligence for clients during mergers, acquisitions, and other transactions, carefully evaluating potential risks and liabilities related to Environmental, Social, and Governance (ESG) issues. This enables your clients to make informed decisions and effectively manage potential challenges that may arise during negotiation and integration processes.
5. Offer Proactive ESG Advice
Provide proactive legal counsel to clients on ESG best practices, policies, and procedures. By addressing potential challenges proactively, you will empower your clients to strengthen their ESG strategies, enhancing their financial performance and reputation while ensuring compliance with evolving regulations.
In conclusion, ESG is a crucial aspect of the legal field today, and it is imperative for lawyers to possess a deep understanding of these issues and handle them effectively in order to best serve their clients.
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