Banga is a speaker at the ESG Summit, Oct. 12
As investors, regulators, customers and key stakeholders increasingly demand that businesses show evidence of their commitment to environmental, social and governance matters, legal departments are stepping up to lead businesses in a range of ESG initiatives – often supported by a sustainability leader.
As vice president, sustainability at Aecon Group Inc., Prabh K. Banga works closely with the legal team in embedding sustainability into organizational culture.
“I find that ESG has gone from a check-off-a-box exercise to being much more informed by regulation and compliance,” says Banga, who will be speaking at the ESG Summit on Oct. 12 in Toronto. “As soon as you have regulation and compliance as a part of a portfolio, it’s very important for in-house counsel to be involved.”
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With increasing rigor around ESG from a regulation standpoint, Banga is finding that sustainability teams are working closely with in-house legal teams to make sure they are in compliance with specific ESG regulation, including Canada’s Modern Slavery Act, and the reporting of GHG emissions which is poised to become mandatory.
As boards are increasingly involved in ESG risk assessments, in-house counsel also play an important role in examining how risk assessment and management are incorporated into an enterprise risk program for the company.
Banga notes that in-house council are often involved in assessing and mapping out ESG risks, by identifying what the key risks are for the organization, and ensuring that the right framework is in place.
“I also think it’s the role of in-house counsel to work with the board of directors to ensure the board is involved in helping to understand what the risks are, and helping to understand how we are mitigating and managing those risks, and essentially creating a comprehensive framework that really oversees the sustainability agenda at a corporate level,” says Banga.
It is important to set the tone at the executive level by ensuring that the CEO and executive team are demonstrating their support for the company’s sustainability initiatives, Banga adds.
As a construction company, Aecon offers incentives to employees working in the field to submit ideas or implement ideas with regard to sustainability. The Aecon Innovation and Sustainability Rewards Program encourages them to suggest ways to make the organization more sustainable.
“I always say that sustainability work requires collaboration from the executive team right to the employees who are working in the field,” says Banga, who joined the sustainability team at Aecon almost three years ago. “In the future, I don’t think sustainability will be a standalone department. It will just be the way that we do business.”
At Aecon, it was the legal department that initially presented an ESG portfolio to the C-Suite and the board. As many companies were facing scrutiny around greenwashing or failure to comply with regulations, the legal team at Aecon chose to differentiate themselves by getting ahead in this area.
“In addition to the regular regulation and compliance, it’s really the role of counsel to be working with the C-suite to think about where the opportunities exist for ESG as well, and one of the opportunities is really around differentiating yourself against your competitors and really demonstrating leadership in sustainability,” says Banga.
The team at Aecon introduced sustainability at the corporate level and then integrated it into an enterprise-wide plan by engaging and training employees.
On a broader business level, the construction company has shifted its focus away from civil construction projects towards projects that are related to energy transition.
“Right now, over 60 percent of our revenues can be tied to sustainability,” says Banga. “Really demonstrating that cultural shift to our employees is really what’s helping to have that shift at the employee level as well.”