ESG and ADR

How do the acronyms ESG and ADR—Environmental, Social, and Governance and Alternative Dispute Resolution—end up in the same title? 

Environmental, Social, and Governance refer to how responsibly and sustainably a company conducts business and generates revenue, measured by its corporate commitment to social and environmental issues. An organization’s use of alternative dispute resolution can incorporate the principles of ESG and have an impact on the environment, the public, its shareholders and employees, and the courts. 

Environmental Impact

Using ADR can help companies see a difference in their use of energy and environmental resources. Some ADR organizations already were quite proficient in their use of virtual arbitrations and mediations, which became a necessity during the past two years. What’s more, however, businesses found it rewarding to work with those institutions whose application of ADR incorporated a mission that served the dual purpose of lessening the burden on already overloaded courts while also having a positive impact on environmental issues.

Eliminating the necessity of travel to in-person hearings is an obvious example of how the move to virtual hearings due to the pandemic benefited the environment. Going beyond that, however, by using technology for items other than virtual hearing rooms is extremely valuable in conserving environmental resources and managing energy consumption. 

This means minimizing the use of paper and printing by utilizing electronic exhibits and electronic means to serve and exchange documents. 

Social Impact

The “S” in ESG calls for companies to provide sustainable, long-term impact as an organization in the advancement of important social issues. 

ADR involves the parties in the selection of those who will determine the outcome of their cases. This unique aspect of the ADR process exemplifies its fundamental attention to the issue of fairness. Companies that participate in resolving their disputes this way go a long way toward the desired result—getting back to the business of business, which benefits disputing parties in particular and society in general.

Companies also have the option of choosing to work with an ADR provider that goes further than case administration, with a commitment to increasing diversity and inclusion in panel lists to extensive outreach in providing fair, effective, and economical methods of dispute resolution to those in need. These efforts are available on the various organizations’ websites.

Governance Impact

The “G,” or Governance, in ESG refers to how a company governs its Environmental and Social components. Businesses can choose the way they wish to resolve disputes. By nature a less adversarial process of conflict management than litigation, selecting ADR, as noted earlier, can affect the environment, the public, the company’s shareholders and employees, and the courts in environmental and social respects. 

Companies also can select among ADR providers. A robust ADR organization will have strong governance structure, with the oversight of an active Board of Directors to ensure secure, ethical, and excellent delivery of services to stakeholders. 

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The content of this webpage is not offered as legal advice or legal opinion and it should not be relied upon for any specific situation. This webpage is for informational purposes only. While the AAA-ICDR endeavors to keep the information updated and correct, AAA-ICDR makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, or reliability of the information contained on this webpage.  AAA-ICDR is not responsible for any inaccuracies, errors or omissions, or for the results obtained from the use of this webpage or the content herein.