Compliance with laws and regulations is no longer enough to protect businesses. Instead, legal department chiefs must stay ahead of reputational risks.
“There’s the stuff you need to do to comply with law. Then there’s the other stuff you might be putting out there,” PwC Head of Legal Teresa Owusu-Adjei said.
Owusu-Adjei spoke at a recent panel conducted by PwC as part of its Legal Services ESG event series. The panel discussed new approaches to social progress for corporate lawyers.
PwC partner Ed Stacey said fair pay is an illustration of the need to head off reputational risks. Any competent legal chief would make sure her company is paying at least the minimum wage for that jurisdiction, but the public may not see minimum wage as fair and sufficient.
Doing the bare minimum in such cases could expose companies to reputational risk.
Performative gestures also can have unintended reputational consequences, said Anna Wallace, a partner at the consulting firm Hanbury Strategy.
She pointed to International Women’s Day or Pride Month as events sometimes seen as opportunities to make big gestures.
“Businesses often look to milestones like that in the calendar to make a splash, all the while hoping it will enhance their reputation,” Wallace said.
“[But] the public are actually more discerning than we give them credit for, and they’ll sniff out businesses that talk a good game but actually aren’t delivering.”
Instead of settling for such gestures, consistency is more important, Wallace said.
Stacey added medium- and long-term planning is critical to achieve that consistency. She also emphasized the importance of collecting detailed data to inform decision-making.
PwC solicitor Polly Miles said data collection is critical to ferret out potential reputational risks associated with a company’s supply chain, for example.
It’s hard work, and the issues unearthed can take more than a year to resolve. But panelists say it’s worth the effort.
“There’s a lot of detail, and a lot of work that needs to go into [data collection], but it’s also an action plan for you,” Miles said. “That tells you everything you need to work on to have that long-term reputational benefit. It’s a case of short-term pain, long-term gain.”