Challenges of Measuring ESG Risks and How Screen Reports Can Facilitate Efficient ESG Due Diligence by Law Firms

Although interest in environmental, social and governance (ESG) factors has skyrocketed in recent years, the tools required to provide detailed ESG information have not kept pace. Landmark Information Group (Landmark) explored the issue of how companies measure ESG performance by commissioning an independent survey (Survey) in the U.S. and U.K. of over 200 senior leaders in corporate businesses and 100 senior professionals from law firms. The Survey revealed that the majority of respondents believe ESG management and measurement is too complex, and they struggle to find consistent data to inform reliable ESG scores. In response to those challenges, Landmark hosted a webinar to offer practical advice and an example of how to conduct effective ESG due diligence using an ESG screening report. The program was chaired by Simon Boyle, environmental legal director at Landmark, and featured Robert Lee, professor at the University of Birmingham; Tom Venables, senior consultant at Landmark; and Paul A. Davies, partner and co‑chair of the ESG taskforce at Latham & Watkins. This article summarizes relevant insights from the Survey and the webinar. For additional commentary from Latham & Watkins attorneys, see our two-part series on ESG-linked fund finance: “Distinctions From Typical Subscription Facilities and Trends in Adoption” (Sep. 28, 2021); and “Two Most Prevalent Structures and Challenges With Use” (Oct. 5, 2021).

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