ESG: Evolution or revolution?

Jonathan Bower, partner, planning and infrastructure team leader and partner lead for net zero by 2030 strategy at Womble Bond Dickinson, sets out the case for a clear ESG vision with a focus on inspiring behavioural change

Historical events have often led to transformative changes. The Industrial Revolution was one such moment and, today, we’re on the brink of another significant shift – an environmental, social and governance revolution. Although centuries apart, there are clear parallels between the two, not least the considerable cultural and social change needed to create a revolution.

But what needs to happen to ignite that cultural shift and what can organisations do to empower their workforce and industry?

What does history tell us?

The term ESG was first officially coined in 2004 in a report by the United Nations and, since then, has become a concept that is front of mind for many organisations. However, the principles behind ESG are arguably much older.

The report, called ‘Who Cares Wins’, encouraged business stakeholders to explore and embrace ESG as a long-term business strategy, addressing everyone from managers and directors to investors and analysts. The report also pointed to parallels with the Industrial Revolution, where social and governance were needed to improve labour conditions.

Following this, familiar concepts such as ‘net zero’ and ‘energy transition’ started to appear and are now on their way to becoming global movements where organisations must embrace cultural change to encourage their success both within their organisations and collectively in communities. ESG practices have continued to evolve along with a growing demand for guidance.

Womble Bond Dickinson (WBD) has been ahead of the curve in meeting this demand from business leaders grappling with the concept, offering guidance on sustainable practices before the term ESG sprung into the mainstream. In fact, WBD has been the go-to legal firm for advice on cutting-edge sustainable innovation across new technologies; from onshore wind farms and battery energy storage systems, to heat decarbonisation and energy transmission, working with clients to tick off industry firsts as they go.

The aim? To ensure the future is shaped around ESG principles – not as an afterthought, but as a cornerstone of business strategy. This distinctive approach has earned WBD a reputation as a leader in ESG, driving change that resonates across industries.

Barriers to change

With a raft of new sustainability regulations on the horizon, which will critically impact how companies tell their sustainability story over the next 12 months and beyond, the ESG landscape is becoming increasingly complex.

Current barriers, including skills shortages and the need for retraining, add further complexities requiring policy interventions to put everyone on the right track and give business certainty – at the heart of it is embedding in a supportive ESG culture. The UK’s skills crisis is well known. It reflects deep-seated social issues, such as economic uncertainty and the impact of Brexit and Covid-19. These gaps affect economic growth and exacerbate problems like youth unemployment and income inequality. Addressing these issues requires comprehensive education reform, targeted training, and lifelong learning policies.

Similar reform is needed in driving renewable energy. For example, businesses involved in offshore wind must navigate lengthy bidding processes, securing consents, dealing with marine licences, land rights and grid capacity constraints. WBD has advised on over 30 offshore wind projects in the UK, which will account for 26% of the ambitious 50GW target for offshore wind. Meanwhile, new technologies like hydrogen, demand a long-term strategy to deliver the level of health and safety expertise needed to progress.

Another barrier to consider is that, while a majority of organisations are focused on investment and reporting, there is a need for uniform reporting standards. This means, while businesses know ESG strategies should form the basis of everything they do, there is a need for a clear strategic framework to guide longer-term visions that can overcome barriers.

In the same way that the Industrial Revolution changed society and industry, the need for concrete ESG legislation and guidance is creating a similar demand. A long-term strategic vision is essential to embed ESG principles deeply within organisational practices.

More significantly, progress is also being hindered by cultural barriers. For example, decarbonising heat is a major factor in reaching the UK’s net zero goals, yet it requires a significant shift in people’s perceptions and substantial investment to have the positive impact needed. Renting properties versus ownership impacts how organisations can install heat networks, and the UK faces unique challenges compared to mainland Europe.

Inspiring cultural change is paramount to overcoming the increasing number of challenges we face within ESG. While a strategic framework is important, unless we’re able to change behaviour on a larger scale, we’re unlikely to see ESG practices realising their full potential or, at worst, organisations open themselves up to accusations of ‘ESG washing’.

Catalysing change

Longer term-policies and organisational frameworks take on a vital role in inspiring cultural change. From investment decisions to consumer habits, governments play a critical role, needing to create long-term strategies that transcend political cycles.

One example of how a project based on societal and community benefit can have a positive environmental outcome, is WBD’s recent work supporting Ambition Community Energy (ACE), securing ‘highly commended’ in Planning Magazine’s Planning Awards 2022.

WBD worked with ACE on a pro-bono basis before advising on the planning strategy and securing consent for a 4.2MW community-owned onshore wind turbine in Lawrence Weston, near Bristol, which, at 150m high, is believed to be the tallest onshore wind turbine consented in England. Crucially, the project was delivered ‘by-the-community-for-the-community’ and is expected to generate electricity to power between 3,000 and 4,000 homes a year, saving over two tonnes of carbon dioxide annually.

Profits from energy savings made as part of the project will fund the delivery of the development plan for the community of Lawrence Weston and there will be an on-site Energy Learning Zone for schools and communities.

Projects like these work well to address all three pillars of ESG, benefiting the social economy of areas such as Lawrence Weston and helps contribute to a just transition – supporting communities where energy costs can be disproportionately prohibitive without this form of intervention.

WBD is passionate about using the skills of its teams to deliver sustainable energy solutions which create a long-lasting benefit for local communities. This approach fosters a positive shift in attitude, as communities directly experience the long-term advantages of sustainable energy projects. These local efforts demonstrate the global trend of incorporating sustainability into business practices, showing a shift towards greater environmental responsibility. Such projects highlight the potential for positive impact, and by continuing to empower communities, we can further drive cultural change.

The debate over whether ESG can be described as an evolution or revolution will continue, but one thing is paramount. In a period of political change, evolving legislation and complex challenges, it’s important to seek reliable and trustworthy expertise. Organisations should embrace a cultural shift, weaving sustainability into the fabric of business. As the Industrial Revolution shaped history, the ESG revolution can shape a greener, more prosperous future and just transition for all.