Amid volatility, uncertainty, complexity and ambiguity, law firms worldwide must prepare to navigate a complex web of strategic risks, writes Robert F van Beemen, partner at DRB in the Hague and chair of the IBA’s Law Firm Management ESG Subcommittee.
The current era is marked by a series of significant challenges, such as growing geopolitical tensions, ongoing climate and biodiversity crises, a surge in complex regulation, wars on the European continent, in the Middle East and Africa, rising inequality, international trade wars, emerging technologies, and the erosion of the rule of law and the democratic legal order around the world. Each of these developments is a challenge in itself, let alone the fact that they are occurring simultaneously, interrelated and reinforcing each other.
Business law firms must navigate this increasingly volatile, uncertain, complex and ambiguous (VUCA) environment. They act as strategic legal advisors to their clients. They have a talented pool of next-generation professionals holding different priorities, expectations and values regarding their personal and professional life. Consequently, a broader range of stakeholders increasingly hold law firms responsible for their role in society and at the same time, law firms play a crucial role in facilitating access to justice.
What does this all mean for business law firms in a world where everything – from geopolitics to climate, regulation and societal expectations – is shifting all at once?
ESG isn’t going away – the risks are still very real
ESG began as a risk framework within the investment community, developed to assess financial exposure to long-term systemic threats such as climate change, biodiversity loss and human rights violations. Long before it became a widely known concept, ESG was already on the strategic agenda of large financial institutions, investors and multinationals and therefore also on the strategic agenda of international business law firms.
When ESG first became relevant to a larger group of companies and thus also to law firms with a rather national (upper) mid-market and boutique market positioning, many leaders of these firms dismissed it as a niche concern – relevant only to large, international business firms and the Big Four accounting firms.
My response was often a simple question: how many of your clients meet the threshold of €40 million in turnover, 250 employees, or €20 million in total assets? More often than not, the answer revealed a blind spot. It was striking to see how many law firms with a significant number of clients subject to CSRD obligations were insufficiently aware of the potential impact of just the CSRD on their clients’ activities with regard to, for example, corporate governance structures (including risk and compliance), reporting and audit obligations, business strategy and reputation management.
And this was just one directive.
As ESG became more mainstream in business law firms’ organisations, operations and legal practices, the conversation among law firm leaders started to change. Questions about ESG’s impact on firm strategy and internal policies started to pop up – but not through planning: it was usually because of external and internal pressures. Clients started asking more and more about their net-zero commitments, DEI policies and sustainability ratings such as EcoVadis.
At the same time, associates were raising ethical concerns about representing clients in controversial sectors such as fossil fuels or tobacco. While ESG awareness was clearly on the rise across the legal industry, many firms remained stuck in a reactive approach, addressing ESG as an operational necessity rather than embedding it in a forward-looking, strategic vision.
In retrospect, the past few years were characterised by strong tailwinds. Governments launched sweeping initiatives such as the EU Green Deal and the US Inflation Reduction Act; corporations integrated ESG factors into their strategy and governance frameworks; and financial institutions increasingly linked capital allocation to sustainability performance through instruments such as green bonds and ESG-linked loans.
Things have changed a lot recently. The US has pulled out of the Paris Climate Agreement again; the EU’s CSRD and other “Green Deal” directives are facing political pressure; companies, including law firms, are scaling back their DEI targets; financial institutions are withdrawing from net-zero alliances; and, supported by “drill, baby, drill”, the fossil fuel industry is divesting from renewable energy activities.
But the material risks addressed by ESG frameworks have by no means disappeared. Just a quick look at the World Economic Forum’s recent Global Risks Report 2025 shows that the outlook for environmental risks has only become worse.
Yet, many of the current events are – in my view – of a different order. At least the Paris Climate Agreement was reached during a period in which there was still a widely held belief that global warming is actually caused by human activity and that only coordinated international action could keep temperature rise below the critical 2°C threshold and avoid the most destabilising environmental, economic and social consequences.
Law firms in a world of legal and geopolitical chaos
The raison d’être of every business law firm lies in the rule of law, a shared set of values around truth and trust, a globalised world and free market economy. It is exactly these fundaments that are being challenged by some of the major current trends.
The rules of the game, including the institutions and systems we have relied on to provide stability are struggling to adapt and are being actively undermined.
The phenomenon of the erosion of the rule of law and the democratic legal order has been observed throughout the world for some time: international cooperation is declining – as seen in countries withdrawing from or ignoring international treaties (eg Brexit; and the US undermining WTO rulings, blocking appointments and most recently pausing funding) – court decisions are being openly questioned, and judges and journalists are being threatened.
Even – or perhaps especially – in longstanding democracies, such trends become increasingly visible. Among a series of far-reaching executive orders, President Trump also decided to target prominent law firms – including Perkins Coie; Jenner & Block; Covington & Burling; Paul, Weiss, Wharton, Rifkin & Garrison; and most recently WilmerHale – accusing them of political bias, corruption and advancing a ‘radical left’ agenda, while also attacking their support for DEI initiatives. But in a world where the rules of the game, including global institutions and systems, are being overturned, businesses cannot thrive. Corporates require clear and respected legal frameworks, protected intellectual property and predictable norms.
The very foundations of truth and shared reality are eroding, making consensus and coordinated action increasingly difficult.
In such an environment, facts become contested, expertise is devalued and disinformation flourishes – undermining the trust that markets, institutions and societies rely on to function. For businesses, this creates profound uncertainty. Strategic decisions – from where to invest to how to communicate with stakeholders – become harder to make when the ground truth is constantly shifting.
For example, in the US, coordinated disinformation campaigns around ESG investing have led some states to adopt anti-ESG legislation, creating a patchwork of conflicting regulatory signals for companies and investors. Similarly, in Brazil, during the Bolsonaro administration, the denial of climate science and manipulation of deforestation data weakened global trust in environmental oversight – jeopardising trade negotiations (eg the EU-Mercosur trade deal) and investor confidence.
Without a shared understanding of reality, regulatory environments become unpredictable, consumer behaviour more erratic and public-private collaboration more fragile. The erosion of truth doesn’t just disrupt politics; it destabilises the very conditions necessary for sustainable economic growth.
The global geopolitical and economic order is becoming increasingly fragmented, marked by rising protectionism, strategic rivalries, and shifting alliances.
This fragmentation poses new challenges for globally integrated businesses. Trade flows are being redirected by sanctions, export controls, and national security considerations. Longstanding alliances fall apart, while new blocs and regional partnerships emerge with competing rules and standards.
For instance, escalating US-China tensions have led to export controls on advanced semiconductor technologies (as seen in the restrictions placed on Dutch company ASML, limiting its ability to sell high-end chipmaking equipment to China). In this new world order, Europe needs to foster its industrial resilience and strategic autonomy.
In that respect, the recently published Draghi report on EU competitiveness is very interesting. The report calls for a coordinated strategy to strengthen Europe’s economic position, including €800 billion in annual investments across strategic sectors such as clean tech, energy and pharmaceuticals. It recommends reforming EU competition rules to enable companies to scale globally, updating merger regulations, and enforcing digital market laws more effectively.
Moreover, the report urges the EU to dedicate 3% of GDP to research and innovation. And let’s not forget the recent ReArm Europe plan, which aims to release up to another €800 billion to boost Europe’s defence capabilities.
Law firms must navigate a new global reality
In this complicated and fast-changing global landscape, business law firms – from the global elite and international business law firms to national and regional law firms operating in the (upper) mid-market – are dealing with a lot of disruption and transformation. As strategic legal advisors to their clients navigating geopolitical tensions, regulatory fragmentation and systemic risks – from climate change to cyber threats – their role has expanded far beyond traditional legal counsel.
Clients increasingly expect advisors who understand not only the law, but also its interplay with strategy, risk and reputation. How will ESG-related regulations and industrial policies affect cross-border transactions? What legal exposure lies within global supply chains or investment decisions in politically sensitive markets?
To meet these demands, many firms have deepened and broadened their ESG advisory services, created cross-practice ESG, including geopolitical advisory services to help clients manage regulatory complexity, sanctions exposure and climate litigation risk. An interesting development is the recent appointment of a senior geopolitical advisor by the Swedish firm Mannheimer Swartling to help clients and internal teams navigate “issues such as geopolitics, global security and security protection”.
Simultaneously, societal expectations are shifting. A new generation of lawyers, clients and other stakeholders is holding firms to higher ethical and social standards. Associates are increasingly asking: Who do we represent? What kind of work do we do – and for whom? ESG is no longer a compliance checklist or a branding exercise (by the way, it never was); it has become a strategic lens through which firms must view their identity, strategic priorities and operations.
Ever more firms are embedding sustainability and human rights into their client and matter intake and training practices. Scrutiny over client and matter choices is intensifying within the legal profession. Recent cases demonstrate the sensitivity of this issue. For instance, a law firm received a letter from Greenpeace for its involvement in the restructuring of a company with alleged links to deforestation and corruption. Additionally, several firms suffered reputational damage due to their association with Russian companies several years ago.
In 2024, the UN secretary-general labelled fossil fuel companies as the “godfathers of climate chaos” and advocated for advertising bans similar to those imposed on tobacco producers – accelerating discussions about the role of professional service providers, including law firms, in achieving a net-zero future.
Additionally, Law Students for Climate Accountability (LSCA) publishes the annual Law Firm Climate Change Scorecard, evaluating major US and UK law firms based on their representation of the fossil fuel industry and the emissions arising from their legal work in transactions, litigation and advisory services – also known as “serviced emissions” or Scope 4. It is only a matter of time before a similar scorecard appears for EU continental law firms.
The legal profession operates at the core of our economic and governance systems. With that comes responsibility—not only to advise, but to lead. Law firms must align governance, culture and strategy with long-term resilience, ethical integrity, and stakeholder trust.
How law firms can cope with a fast-changing world
To cope with a fast-changing and increasingly volatile world, law firms must think beyond ESG as a standalone concept. The real challenge lies in navigating a complex web of strategic risks – ranging from geopolitical fragmentation and shifting regulatory frameworks (such as CBAM, CSRD, export controls, and the Draghi report) to evolving stakeholder expectations.
But within that complexity lies opportunity. ESG is no longer a niche concern or a marketing add-on – and never has been. It has become a core part of how law firms must approach strategy and serve their clients. This demands more than just regulatory awareness; it requires deep insight into the sectors and industries of their most strategic clients, and the integration of legal expertise with geopolitical, sustainability and business acumen.
At the same time, younger generations of lawyers and socially conscious clients are demanding greater alignment between a firm’s values, client portfolio and societal impact. Climate change, supply chains, security and social equity can no longer be viewed as peripheral – they are central to client advice and internal strategy alike. And as the rule of law comes under pressure, even in established democracies, law firms are being called to step up not only as legal advisors, but as institutional actors with influence and responsibility.
I often hear that ESG – whether you want to call it something else or not at all – feels ‘complex’ and ‘abstract’.” But make no mistake – while it is indeed complex, it’s anything but abstract. The risks addressed by ESG are very real, the opportunities are tangible and, for law firms, understanding ESG and beyond is more than ever becoming a matter of competitive advantage.
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Robert F. van Beemen is a partner at DRB Group in The Hague, Netherlands, with a focus on law firm strategy, ESG and governance. He’s also the chair of the Law Firm Management ESG Subcommittee of the International Bar Association (IBA).