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Helping your business make a positive impact

Environmental, social, governance (ESG)

The business landscape has changed. An organisation's character is under as much scrutiny as its performance. Businesses are turning their focus to ESG factors to optimise shareholder value and address customers', employees', regulators' and other stakeholders' concerns, as well as consider use of natural and other capital sources. Those that demonstrate a positive social impact have enhanced credibility and trust. Those that don't face increasing reputational, economic and financial consequences.

SPEAK TO AN EXPERT

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Accelerating to net zero. Priorities for business and the roles of legal teams

We cover the recent regulatory changes in climate risk, disclosures and stakeholder expectations and areas of influence.

SUBSTANTIVE LAW, 1 CPD point

Recorded: 1 March 2023

Where to start in managing ESG

Stakeholders’ expectations on organisation to manage ESG concerns are fast-evolving. Organisations must quickly ascertain how they are going to address those ESG considerations based on what matters most to their business and the role they play in society. ESG covers matters as diverse as ethical decision-making, diversity and inclusion, climate change, modern slavery and sustainable finance. A growing number of frameworks, regulations and legislations are guiding businesses’ efforts in devising, implementing and reporting on more sustainable business practices. Organisations are also focused on sustainable value creation, with many accessing a growing pool of equity and debt finance looking to achieve both financial and social returns. Being able to prioritise efforts and have fit-for-purpose governance models is critical for organisations to minimise risks and maximise opportunities associated with ESG considerations.

Knowledge and expertise

Our team can help you comply with the broad range of fiduciary and ESG regulatory requirements and shifting community expectations. This includes critically reviewing existing climate governance models, advising on how best to tackle modern slavery in the supply chain, developing fit-for-purpose risk frameworks or ensuring disclosures are not misleading. Our holistic, purpose-oriented service group offers a future-focused, risk sensitive view of sustainable and responsible business practices. We help organisations think beyond compliance and risk to add genuine value and take advantage of new opportunities.

  • Climate risk governance
  • Human rights and modern slavery
  • Risk and regulatory consulting
  • Sustainable finance
Climate risk governance

Climate risk is an issue facing all businesses. It has mainstream recognition as a material financial risk across physical, economic transition and litigation dimensions. For both corporate and public sector entities, regulatory and investor expectations on climate risk assessment and disclosure are accelerating, posing both risks and opportunities that need understanding, assessment and appropriate action. Find out how to thrive in a 'net zero' economy'

Human rights and modern slavery

Failing to manage the risks associated with human rights and responsible sourcing can cause businesses significant damage. It extends to reputational consequences, a decrease in market share, difficulties with sourcing finance and the potential to lose a company’s social licence to operate. Businesses need to take proactive steps to ensure human rights and responsible sourcing are front of mind in all their activities.

Risk and regulatory consulting

ESG obligations must be viewed as strategic priorities for organisations – or businesses can be exposed to serious risk. However, proactive engagement with investors, regulators and other interested stakeholders provides opportunities to strengthen relationships, anticipate the risk horizon, and trigger strategic partnerships and innovation. Legal, risk and compliance functions must support organisations in navigating this complex risk landscape

Sustainable finance

Financial capital is increasingly being filtered and mobilised around ESG screens and metrics. Financing to support transition to net zero pathways and meeting UNSDG's and broader sustainability principles are becoming increasingly important. This has led to the development of green and sustainable finance taxonomies and exponential growth in sustainable finance. Transition finance is the next growth area.

In addition to potentially reducing applicable interest rates, sustainable finance can attract a more diversified and 'sticky' investor base and lending group. Sustainable finance facilities can also provide reputational advantages for the borrower in commercial markets.

Need help with your approach to ‘climate-conscious’ contractual drafting?

Case studies

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Greenwashing defence – climate policy implementation

We advised a major New Zealand bank on the levels of corporate governance and misleading disclosure risk inherent in the commitments made in its proposed Environmental and Social Policy.

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We conducted a thorough review of the draft Policy, published collateral including media statements, product advertising and prescribed disclosure. This enabled us to assist our client to understand the implications of the commitments made throughout the policy.

We identified areas of material risk to the client (including litigation, reputational and compliance risk), then worked with the client to refine the Policy, taking those risks into account. This approach empowered our client to make well-informed decisions and contributed to its development of a robust policy for its business.

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Modern Slavery Reporting implementation

We have worked with our clients on compliance with all aspects of the Modern Slavery Act 2018 (Cth). This includes conducting targeted training for legal, compliance, procurement, HR, CSR and other teams. We have developed tools and processes to facilitate efficient implementation of risk assessment and due diligence requirements.

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Social impact bonds and outcomes contracts

In addition to Green, Sustainable and Social finance transactions, we have acted for Governments, Issuers, Arrangers and Investors on many of the Social Impact Bond (SIB) programs facilitated by State Governments, as well as payment for outcomes (PBO) contracts.

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SIBs and PBOcontracts provide funding to address areas of disadvantage (such as out of home care, youth unemployment, indigenous empowerment and so-on). The return to investors under such SIBs is generally determined by a share of savings to the relevant governments arising out of successful program outcomes, whereas PBO's pay for specific outcomes and returns do not necessarily scale with share of savings.

Leading the Australian conversation on ESG governance

We've partnered with business advocates to lead the Australian conversations on evolving risk in ESG governance.

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Hutley opinion

MinterEllison were the instructing solicitors to Noel Hutley SC and Sebastian Hartford-Davis of Counsel the seminal Hutley Opinions (2016, 2019, 2021).

New Hutley Opinion: What does it mean for directors?

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AICD

MinterEllison has partnered with the Australian Institute of Company Directors (AICD) to release a plain-language guide to assist directors with their climate risk journey.

Climate risk governance: What directors need to know

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CPA Australia

MinterEllison was engaged by CPA Australia to produce a guide to climate change assumptions and disclosures in financial statements, Climate Change & Financial Reporting (2021).

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Responsible Investment Association of Australasia (RIAA)

MinterEllison is the lead legal advisor to RIAA, and lead member of its Nature Working Group. Sarah Barker is a former non-executive director on the RIAA board.

MinterEllison acts for RIAA in relation to Australian financial services licensing issues in connection with its product certification and ratings initiatives.

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Australian Sustainable Finance Initiative (ASFI)

Sarah Barker was the only lawyer represented on the SteerCo of the industry-led Australian Sustainable Finance Initiative.

MinterEllison also acted for RIAA (as the auspicing body) on establishing the Australian Sustainable Finance Institute, as a charitable entity, to carry out the implementation of the ASFI Roadmap. the Roadmap was released in November 2020, and contained 37 recommendations for creating a resilient and sustainable finance industry.

Featured Content Module

AASB/AUASB

MinterEllison are the only lawyers represented on the Advisory Committee of the Australian Accounting Standards Board and Auditing and Assurance Standards Board on Extended External Reporting, convened to consider the implications of climate change on the interpretation and reform of Australian accounting standards.

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https://www.minterellison.com/environmental-social-governance

Our thinking and experience

Lead contacts

Sarah Barker

Partner and Head of Climate Risk Governance, Melbourne

Keith Rovers

Partner, Sydney

Donna Worthington

Partner, MinterEllison Consulting, Sydney

Julie Whitehead

Partner, Brisbane

Jordan Phillips

Partner, Brisbane

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