As I did my usual Monday morning trawl of the business pages this morning I was struck by one story in particular. A hard hitting report by the Social Market Foundation on poverty in London – and the role of business in helping tackle it – accused FTSE 100 companies of not playing a significant enough role in tackling poverty, despite embracing ESG. As Social Market Foundation director James Kirkup said, Britain’s biggest companies are ‘ignoring the S in ESG’ as he called on the FTSE 100 to do more. As The Times and others reported, thorough analysis of the latest annual reports showed that the FTSE 100 were 64 times more likely to discuss climate issues than they were to use the word poverty in their annual reports.
On my commute into the office I thought about what this might mean for law firms. Everybody knows that the battle for talent is sending salaries at the top end of London legal work ever northwards and at a rate far ahead of the majority of other sectors and regions. For many people living in tough financial positions the looming (and inevitable) hike in energy prices is a massive concern, coupled with soaring inflation in particular for essentials like food. There is an uncomfortable juxtaposition here that poses reputational risks for the industry.
While firms have largely done a really good job in communicating the ‘E’ and to a lesser extent ‘G’ in ESG, the ‘S’ has overwhelmingly focused on D&I, particularly in respect of access to the profession and once in it. I have long thought that a question on law firm salaries may be posed by the Labour party, with perhaps a BEIS select committee resulting. There is certainly a precedent with the Gender Pay Gap, where current Shadow Chancellor of the Exchequer Rachel Reeves called professional services to account in 2018. Today’s research, coupled with the levelling up agenda, makes this more likely and firms are going to have to think about how they justify high salaries against the financial discrepancies in society at large.
If the FTSE is getting tackled on poverty then, as on climate change and inclusion, firms will be expected in time to demonstrate their credentials publicly and almost certainly in pitches. For corporate responsibility, business development and communications teams, this issue surely will become a priority in terms of getting the message right for the media, clients and internal stakeholders. I’ve no doubt that law firms are working hard in trying to address poverty through their work with schools in disadvantaged areas or ensuring all their suppliers are signed up to paying the London Living Wage, but today’s headlines show that – from a reputational perspective – making a positive impact on poverty may become as important as contributing to the Race to Net Zero.