ESG which stands for environmental, social and governance responsibility becomes one of the main priorities in many companies – you can act in a way that makes the world a better place and promote long-term sustainability. The ESG criteria are being considered not only by the investors – current assessments estimate that there are more than $330 billion in assets under management in ESG funds, with the creation of more ESG funds expected in 2022 [1]. ESG compliance also speaks to your current and future employees as well as partners – they will more likely to interact with the ESG compliant company.
Thus, these criteria should stand not only in your investment policy but also in the everyday life of your company as all activity of your company will be measured through these three angles very soon, if not yet. However, adapting to these is not an easy task for any management.
Intellectual property helps to shape the future. Also, and there is no doubt, if used properly it could serve as a good shortway to achieving your ESG goals. Innovation comes together with sustainability. Green initiatives serve for climate change activities. Thus, intellectual property cannot be set aside in your ESG goals but rather put as a priority.
Beyond the shadow of the doubt, using licensed products is the hygiene of every company acting in the modern world. But just imagine for a minute what would happen if your company is accused of using non-licensed IT products or counterfeit goods? That would distance the goals of ESG for light-years.
The same applies to data protection. Meta (also known as Facebook) already turned toxic for ESG investors due to their data leaks. Thus, it is important to have all proper legal documentation and technical solutions for protection of date in place.
Therefore, it is extremely important to perform a recurring audit of the IP portfolio that your company uses to be sure that it is all yours and does not infringe the rights of third persons.
Also, social responsibility means attitude towards your employees and their IP rights. Each company should have the employees‘ IP rights‘ transfer policy that would include not only simple clauses that all IP created by the employee should go to the company but also would set out the rules on fair and proper remuneration for the transfer of the IP rights as well as the use of it.
Trademarks also could serve as a good guide towards environmental maturity. It is common that many companies try to show their eco and green path by registering and use of eco-friendly trademarks. But does every that trademark marks the environment-friendly goods or service? ESG forward company should make no compromises here and ensure that consumer is informed about sustainable and green products by their trademarks.
Patent-focused companies are also more attractive to the investors – and if a patent is ESG focused the investors will be willing to put even more money on the table. This will happen in many cases, but not always – the research performed by Harvard Business School [2]shows that the energy sector, that is a pioneer in green patenting, is not popular among ESG investors while other sectors get significantly higher ESG scores if they have green and/or social inventions, even of lower quality than the energy sector. Thus, having a green or social orientated invention and geting patent for it would mean a higher ESG level.
Also, licensing your IP portfolio assets that have social aspects would likely place your company on the list of ESG-focused companies. The licensing of COVID vaccine patents could be a good example of this initiative. Some companies may even consider public licenses for their IP rights.
These are just a few examples of how intellectual property could help to boost your ESG goals. Thus, every company should focus on the proper use and protection of its IP.
[1] https://www.skadden.com/insights/publications/2022/02/esg-2021-trends-and-expectations-for-2022
[2] The ESG Innovation Disconnect: Evidence from Green Patenting, presented by: Lauren Cohen
