Environmental, Social & Governance (ESG) from a legal perspective

The topic of environmental, social and governance (ESG), in the sense of corporate responsibility for the social and ecological impact of economic activity, is increasingly becoming the focus – also of medium-sized companies. The transformation process is being driven by a steadily growing density of legally binding regulations, compliance with which in practice requires the establishment of group-wide management processes. However, this poses challenges for German small and medium-sized enterprises (SMEs) in particular.

Despite the steady increase in the number of regulations in recent years, laws that have barely come into force are already being revised and supplemented by new initiatives. Against the backdrop of its ambitious EU Green Deal, the EU is pursuing an all-encompassing regulatory approach aimed at a holistic transformation towards a green and fair European economy. ESG is therefore a term that is increasingly on everyone's lips but can still be difficult to grasp in terms of content.

Environmental, Social and Governance covers a plethora of issues that now, in an increasingly legally binding context, strive for the following fundamental goals:

E: To bring the economy into harmony with our planetary boundaries;

S: To reconcile social values with economic growth;

G: To ensure responsible corporate governance.

Our clients face major challenges in the context of ESG, however – and this should be stressed –these also bring unique opportunities. New markets are opening-up and the EU-wide homogenisation of the legal framework is creating a level playing field which eliminates competitive disadvantages for committed companies. At the same time, however, new risks are emerging, the management of which appears to be becoming a challenge, in particular for SMEs with their traditionally scarce administrative resources. It is precisely here that the ever stricter standards for sustainable business are being put to the test in terms of their practical suitability, especially when the lack of experience in the practical application of new sustainability regulations creates legal uncertainty. However, it can already be said with certainty that entrepreneurial success in the future will be closely linked to the topic of sustainability. With foresighted planning and implementation, the closely interlinked sub-areas of ESG reveal numerous synergy effects, which is why successful ESG compliance in practice is often not as complex as initially assumed. However, it is essential that companies are willing to systematically review their own business and management processes in light of the new legal situation and adapt them to current and future ESG requirements.

As part of these efforts, we support our clients with our proven “Kümmerer” principle across all disciplines and jurisdictions in order to successfully leverage the potential of the sustainability transformation and make legal risks manageable. We not only support entrepreneurs in navigating the increasingly dense regulatory landscape and meeting the growing legal requirements. Our broad team of ESG experts in legal advice works hand in hand with our tax advisors, auditors and data & IT experts to create economically viable solutions for the complex issues of ESG for and with our clients.

In a successful sustainability transformation, the diverse aspects of ESG fit together like pieces of one and the same puzzle and form a coherent overall picture – assuming targeted planning and practical implementation. Get to know our experts on the following topics and benefit from our many years of interdisciplinary and international experience in dealing with the various aspects of corporate responsibility and sustainability.