This need for assistance stems from a variety of factors, but the overriding common concerns in processing the vast amount of available information are the lack of internal bandwidth, a lack of efficient internal processes, and the pressure to maximize the return on legal spend. Many businesses are at various stages of this journey, from understanding the baseline legislation and regulations to maintaining the currentness' of content already gathered. Clients in the legal, risk or compliance functions are all looking to establish a baseline of knowledge, understand shifts in legal regimes, identify changes on the horizon, and understand what the impact or potential impact on their organization, while planning for the steps that need to be taken.
Over the past year there has been a rise in requests from Environment, Social, and Governance (ESG) and labour subject areas.
In 2024, many clients requested support in understanding the development of ESG legislation and building frameworks for necessary actions, reporting requirements, and timelines. This urgency has subsided to some extent with the European Commission moving to simplify requirements and reduce administrative burdens, but it has still left clients seeking to understand what their current and future obligations are in relation to baseline regulations, and their application. A definitive split can be seen in the end goals that clients are seeking, depending on the location or reach of their organization.
Those based in the EU, or with significant operations in Member States, have a high-level internal awareness of EU ESG directives, whether through internal efforts, industry or legal publications or news alerts. However, they are not always aware of the current status of the EU directives, their effective dates, or the requirements each impose on the organization. Additionally, as these changes in application and requirements occur, organizations are seeking to understand the status of the directives on a country level, and whether these directives have been transposed into local legislation.
While the depth of knowledge requested by such businesses vary, the initial requests often centre around current requirements and the proposed merger of the EU Corporate Sustainability Reporting Directive (CSRD), the EU Corporate Sustainability Due Diligence Directive (CS3D), and the EU Taxonomy, as well as the European Sustainability Reporting Standards. Clients are requesting efficient solutions to build a knowledge base and maintain its currentness, as these directives evolve and are transposed into Member States’ regulatory schemes. Tracking these developing regulations is critical for clients to assess the impact on their organization, understand what the requirements (reporting or otherwise) are, determine and plan around the deadlines, and assess the penalties and risk for non-compliance.
Even clients without a significant exposure to EU Member States markets have increased their requests to understand the current state of ESG laws in their markets, and the potential regulations that are on the horizon, recognizing that actions taken by the EU have ripple effects to varying degrees throughout the world. They are seeking to understand any potential impacts of the EU directives on their organization, as well as seeking assistance in building baseline knowledge in the markets they operate in, and keeping the information current. In the US this is especially true as it relates to the litigation surrounding the Securities and Exchange Commission’s rule on The Enhancement and Standardization of Climate-Related Disclosures for Investors, new restrictions on PFAS enacted by the EPA and many states, and the implementation of California’s climate-risk disclosure laws (Senate Bills 253 and 261).
Furthermore, over the past year we have seen a rise in requests to assist with the baseline build and maintenance of knowledge bases for labour laws and regulations. Based on client feedback, this has been spurred on at least in part by potential requirements in the EU directives (such as the Equal Pay Directive), which have essentially triggered an internal push to bring the organization’s internal knowledge base on labour laws current. Organizations are looking to refresh their internal knowledge on everything from mandatory paid holidays and leaves (sick, maternity/paternity, jury duty, voting, etc.) to working hours (maximum daily/weekly hours, overtime, holiday pay, etc.) and employment contracting requirements (form of employment contract and applicable characteristics/requirements, temporary vs. permanent, fixed-term, indefinite, probation period and termination of employment).
Also, we have seen a rise of organizations trying to understand and catalogue changes in labour laws, in both their current corporate footprint, and jurisdictions into which they plan to extend. Clients are looking to replicate the required baseline knowledge in their current markets to those expansion markets, to be able to effectively plan and assess their needs during the expansion, and also to integrate those markets into the organization’s overall culture and corporate fibre.
As the sociopolitical climate changes at a rapid pace, clients have identified the need for currentness in their internal knowledge content from a legal, risk, compliance and planning point of view. While clients have accessed a firehouse amount of content, they have recognized that they might not have the internal bandwidth, established structural workflows or ability to process the information in an efficient cost-effective manner.
Depending where the client is on their content journey, we have been able to support them through the initial build of their baseline knowledge, as well as the maintenance and currentness of that information through a mix of leveraging machine learning and AI, along with legal research and subject matter professionals.
Our Legal Operations team provide Horizon Scanning services with bespoke tailored information needed to assess impacts from the changing legislative and regulatory landscape, and plan accordingly to comply with regulatory and reporting requirements, while providing a cost-effective solution increasing the return on their legal spend.
If you have any questions or would like to discuss any of these topics and what they mean for you and your business, please get in touch with our Consumer sector and Legal Operations experts.
