ESG is the three-letter acronym, for a movement, arising first among environmental activists, that has become, in just a few years, by far the most important new movement in the world of the 12,000 U.S. public corporations. For many of these corporations and for their lawyers and their other professional advisers, it is a movement with multi-billion-dollar stakes.

And the U.S. ESG movement is also a global movement. ESG is thus far not a significant movement for the millions of privately held U.S. small businesses, including the tens of thousands of such businesses in New Hampshire. But it soon will be.

In this column, I’ll briefly describe the U.S. public-company ESG movement, and I’ll suggest, in just a few words, its potentially massive emergence in New Hampshire. In future columns, I’ll discuss in detail, insofar as relevant in New Hampshire, key ESG terms and concepts such as greenwashing and ESG executive compensation.

-- The “E” in ESG means “environmental.” The key conviction motivating ESG activists is their belief that if the corporate world fails to rapidly and massively transform itself to fight climate change, the earth as we know it will be destroyed. The key goal of ESG activists is to promote this transformation. They seek to do so in dozens of ways, but their main effort is to change corporate securities laws to require every public corporation to make detailed disclosures of its environmental impacts and to adopt and publicly disclose the concrete means it is using to become ESG-friendly.

-- The “S” ins ESG means “social.” The social goals of ESG activists consist, for example, of seeking employee diversity, equal pay and other employment benefits for public company employees.

-- The “G” in ESG means governance — e.g., the goals and procedures employed by shareholders and directors in adopting pro-environmental and pro-employee corporate decisions.

As I’ve noted above, even in the near future, the ESG movement, under that very three-letter acronym, will become a major movement for New Hampshire businesses and institutions. How will the New Hampshire ESG movement express itself? A few preliminary suggestions:

-- As an indispensable means to retain their current customers and to gain new ones, New Hampshire businesses will have to advertise themselves as ESG-friendly. But of course, they can’t make these advertisements unless they first adopt significant internal ESG policies and implement them. And if they don’t do so, they may become the targets of their competitors and ESG activists in the press and even in lawsuits.

-- In order to preserve their public reputations and gain students, New Hampshire educational institutions will have to widely publicize their ESG commitments. But they, too, may pay a heavy price if they violate these commitments.

-- For many New Hampshire lawyers and other professionals with expertise on ESG issues, a major new field of practice will emerge—that of advising business and institutional clients on how to be ESG-friendly.

 

John Cunningham is a lawyer licensed to practice law in New Hampshire and Massachusetts. He is of counsel to the law firm of McLane Middleton, P.A. Contact him at 856-7172 or lawjmc@comcast.net. His website is llc199a.com. For access to all of his Law in the Marketplace columns, visit concordmonitor.com.

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