Third MoFo ESG Survey in Partnership with Corporate Counsel: ESG Strategy Shifts Back to Governance as C-Suite Leaders and GCs Focus on Materiality, Good Governance, and Data

• This year’s survey illustrates multiple ESG priorities. Organizations focused on ESG alignment through operations with changes in strategic business decisions (52%), purchasing decisions (38%), and supply chain management (28%); new approaches to climate risk (39%); and increased public transparency (38%)

• Over half of respondents (56%) have not experienced or been impacted by ESG backlash

Morrison Foerster, a leading global law firm, today announced the results of its third “GCs and ESG” survey in partnership with Corporate Counsel. In-house counsels remain focused on ESG for regulatory compliance and operational opportunities. As ESG programs have matured and evolved, organizations have increased deployment of materiality assessments, which has led to better data for regulatory disclosure, more climate‑focused operational efficiencies, and revealed new areas of value creation. 61% of respondents reported that their organization’s leadership or board focused on governance issues in 2024. The second area of focus is Human Capital (including diversity), with 57% responding with above average involvement. Organizations are also increasingly tying DEI compensation with climate data, and these remain key factors among KPI for executive pay.

“Smart organizations are preparing beyond regulatory disclosure requirements and looking past the external ESG scrutiny to assess how their ESG program can help with risk management, operational efficiencies, and shareholder value creation,” said Susan Mac Cormac, global co-chair of Morrison Foerster’s ESG + Sustainability and Social Enterprise + Impact Investing practices. “The future of ESG is helping organizations see around climate, governance, and human capital corners so they are not only prepared but can exploit the opportunities that arise. As we see in the survey results, ESG is here to stay and the keys to success will be internal collaboration, good governance, and new technologies.” 

Survey Highlights

• Though C-suite leaders make up the largest group steering ESG strategy, in-house legal departments and GCs are increasingly becoming more involved.

• Governance is regaining more attention in organizations.

• DEI and climate-change issues remain key factors among KPIs tied to executive pay.

• More organizations, almost one-quarter in 2024, are changing or not using the term ESG. Yet more than half say they are not encountering ESG backlash.

• Confidence that organizations have a comprehensive ESG program fell significantly. But confidence is highest when organizations conduct materiality assessments that weigh priorities, goals, and risks.

• Far fewer companies, including those that are publicly held, provide ESG disclosures.

• Almost half, about double from the year before, say their internal stakeholders do not know how to “own” ESG as part of the company culture.

ESG Motivations: Regulations, Managing Risk, and Consumers Preferences

ESG as a risk-assessment tool continues to be used by organizations beyond regulatory compliance reasons for many organizations. More than half the respondents, 52%, report that ESG drove their organizations to alter strategic business decisions, compared with 37% in 2023 and 64% the year before. More than a third, 39%, said ESG drove climate-risk changes, an upward trajectory from 27% in 2023 and 3% in 2022. Additionally, 33% of respondents are motivated by changing consumer preferences for inclusive, climate-friendly corporate policies, a 13% increase from 2022.

Diversification in ESG Program Leadership

As ESG programs expand to encompass materiality assessments, the responsibility for a company’s ESG program has diversified. In the first year of the survey in 2022, 77% of respondents reported their general counsel or legal department leading the ESG strategy compared to 40% in this year’s survey. Increasingly, organizations are turning to C-suite leaders and Chief Compliance Officers, specifically to lead their ESG program. This leadership diversification is especially important as internal coordination is necessary to achieve appropriate climate disclosures and operational efficiencies.

Public vs. Private Companies

Increased regulatory requirements and external scrutiny has lowered confidence more in private organizations than in public ones. Confidence in ESG programs already in place plummeted to 44% in 2024, from 69% in 2023 and 62% in 2022. Private companies, in particular, responded with even lowered confidence of 34%, down from 73% in 2023. As a result, the survey shows that the percentage of private companies who are providing ESG disclosures have also declined from 70% in 2023 to 44% in 2024, whereas, overall, the decline was only 19%.

Priorities Shift to Governance

While last year’s survey saw an increase in focus on the social and environmental aspects of ESG, this year’s survey reported a course correction back to governance, the theme from the first survey in this series. Above-average scores for a focus on the governance pillar were 61% in 2024, 53% in 2023, and 84% in 2022. This shift back to governance could be due to the increased complexity of ESG reporting and disclosure as well as the need for internal collaboration to execute on climate-advantaged operational changes. Environmental concerns came in second but saw a big drop from 78% in 2023 and 63% in 2022. Focus on social issues also declined this past year: 53% in 2024, 73% in 2023, and 78% in 2022.

To download the full survey results, visit our ESG + GCs resource website, which includes additional insights by the Morrison Foerster ESG team. 

Methodology

As part of its annual ESG benchmark survey, Corporate Counsel, in partnership with Morrison Foerster, surveyed legal department leaders with titles including general counsel, chief legal officer, or vice president of legal to study the extent to which ESG policy and compliance development, implementation, and reporting falls to corporate legal departments. Responses were collected by invitation online and via telephone interviews. The anonymous survey was open from February 1 to April 19, 2024, and was completed by 97 respondents. Respondents’ titles included general counsel (“GC”), chief legal officer, vice president of legal, chief compliance officer, and the like. The size of the respondents’ legal departments ranged from a single lawyer to those exceeding 60 lawyers. This annual study measures shifts, values, and best practices used by U.S. corporations, governmental agencies, and nonprofits.

About Morrison Foerster

Morrison Foerster is a leading global law firm. We are proud to develop pioneering legal innovations related to ESG for over 20 years, and to offer unmatched industry-leading experience to assist social enterprises and investors that require market rate returns while preserving impact. In addition to our deep commitment to pro bono, our clients include the strongest public and private companies as well as private equity funds, impact investors, and NGOs. We represent organizations as they grow, innovate, disrupt, and develop into leading industry players and household names. Our attorneys are at the vanguard of the ESG evolution as founding members of the Social Accountability Standards Board, and on the boards of Ceres, Business for Social Responsibility, and the United Nations Environment Programme Finance Initiative. Morrison Foerster has been recognized on The American Lawyer’s A-List for 21 of the ranking’s 22 years, highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values‑based culture. For more information, visit www.mofo.com.