Emily Morison (EM): Paola Fonseca serves as Senior Corporate Counsel at Sphera, a leading provider of integrated sustainability and operational risk management software, data and consulting services. Paola has over 18 years of expertise in corporate governance, contracting and ESG regulatory compliance throughout Ibero-America. Paola is currently completing a PhD at the UN University for Peace, where she examines how multinational business practices and global ESG standards foster impact investment regulation across the value chain. Her research also addresses how EU regulations, including the Corporate Sustainability Due Diligence Directive, foster mandatory self-regulation in the Global South through supply chain pressures. Paola recently spoke at the IBA ESG Conference session on bridging the ESG divide, harmonising Global North standards with Global South realities.
Paola, thank you so much for agreeing to speak with us today. To start, could you tell us a little bit about how you came to work in sustainability and to take on your current role as Senior Corporate Counsel at Sphera?
Paola Fonseca (PF): Thank you very much for inviting me. I started as just a traditional in-house counsel for a company. I worked there for 15 years, and then the company had to comply with ESG reporting requirements, and the legal department was asked to lead the project. At that time, I raised my hand, and I said, I can do this, and they said yes. So, I started the journey. I had the appropriate budget, the appropriate approvals in order to move on, but the implementation was a challenge I had not foreseen. Collecting data from various jurisdictions was complex. That is how I came to understand the importance of having accurate data and having good lawyers that can appropriately advise on reporting scope.
Once I learned about these challenges, I learned about the complexities of ESG, I fell completely in love with everything ESG and the positive value it could bring. And I decided to move into academia to try to understand how these Global North-driven regulations are impacting the Global South, mostly to support creating contextual policy for the Global South. Once I wrapped up on that, I moved on and I currently work for an amazing organisation called Sphera that supports clients not only in meeting those sustainability requirements, but actually transforming sustainability-related data into a strategic value.
I wanted to reference strategic value because it lies at the heart of why ESG is a good idea, why sustainability is a good idea, because there is commercial and competitive value behind it for businesses and if there’s one thing I've learned from going to the context, from going into the communities across the Global South while researching my PhD, is that they know vendors can help them comply with ESG requirements, but it is ultimately that organisation that’s embedding them into their value chain, the one that actually drives that positive value. So, I’m very happy now to be able to be part of an organisation that actually enables organisations to understand the value of sustainability.
EM: Thank you so much. In the session that we’ve just had at the ESG Conference, you used the phrase ‘data is king, context is queen’. Could you explain what you mean by that?
PF: So, this concept regarding ‘data is king and context is queen’ relates to how we enable ESG compliance to occur. We all know that in order to make better decisions, we need accurate and complete information, right? And that is good data. We can collect it in several different ways, but the way you then interpret that data relates to the context in which it was collected and also the context in which you want to utilise it. Context includes so many different layers, including different cultural tones and values, and including regulatory mandates. If you are able to get as close as you can to understand the context, the better your king – your data – will be utilised. But you cannot just have the king; you need to have the queen, the context.
EM: As someone who lives and works in Costa Rica, can you share some insights on how Costa Rica’s perspectives on sustainability differ from the perspectives of perhaps other economies?
PF: Surely Costa Rica – Costa Rica, my país – Costa Rica is a very small economy. We’re fewer than five million people and our whole economy in a way evolves around sustainability. Costa Rica is one of the most biodiverse countries on earth despite our small size. Our environmental protection laws foster companies to comply and care for our environment. And sustainable tourism is a big source of income because a large portion of our territory is national parks and we want to keep them like that. We want people to visit them and to be able to go to a beach that’s completely quiet, a beach where they can enjoy actually connecting with nature. And because of this, coming from Costa Rica, because how our economy thrives on sustainability, I see the value in sustainability. I see the value in conveying a message that reports ESG compliance. I see how it creates jobs, how it creates opportunities for small, medium-sized companies and larger companies. I basically see how it delivers income to the population.
Now, Costa Rica, as you know, since the 1940s, does not have an army, okay? So again, it is as if our history or our delivery model of progress for citizens lies very much in peace, in tourism, and in an environment where sustainability is treasured. Not so much as, you know, our cultural production or so on as some other countries in Latin America. But you asked me about Costa Rica and I just gave you an overview on how the regulations support this, the economy supports it, and our culture supports it. But we are not the world; Costa Rica is not the world.
For example, right now we’re here in Paris. What would it mean for a city, which I believe is the city that’s visited by most tourists in the world, to actually come up with a sustainable tourism offering like the one from Costa Rica? What does that mean from a social perspective? Are businesses able to change and adapt? How fast can they adapt? Is that something that the French will consider that’s appropriate? I don’t know, the same with other regions in the world, in North America or across Europe. We all can create different opportunities when we gather the appropriate data, and when we contextualise it, taking it back to ‘data is king, context is queen’. And once you have the data, you know, this variety of opportunities that you can observe creates thriving industries. It has created them in Costa Rica.
Understanding the data allows us to create different opportunities. We can all create different opportunities, this variety of businesses creates thriving opportunities, but some industries are naturally better adept at ESG compliance than others.
EM: Paola, you’ve talked about the importance of data. What is the role of lawyers, do you think, in helping companies to use data for good governance or good sustainability outcomes?
PF: Good governance, you’ve hit the sweet spot. Lawyers have been advising companies on how to do business for centuries. We now need to become enablers, enablers to help them comply with ESG-related regulations, to comply appropriately with what their buyer is demanding from a sustainability perspective, and to mitigate risk and become resilient. We are positioned to help companies understand how that regulation can be interpreted in the context of what the company actually needs so the leaders of that organisation can make informed decisions to lead the business to success. We’re advisors, in-house counsel, external counsel. Our voice is incredibly important. Our voice is there at the board of the directors, talking to the CFO, talking to CEO. We’re providing our point of view on how to help businesses use sustainability compliance to excel. That is what we can deliver. If a lawyer is able to articulate and interpret well all these scenarios, then leaders have better data in order to make better decisions. With the interpretation that comes from legal, a company can better understand what that regulation that recently was implemented somewhere means to them, for their context, and the value compliance with it can actually deliver.
EM: You’ve made some really interesting observations just there about the role of a lawyer fundamentally and that raises questions about the type of lawyers that we should be striving to be. Is our role simply advising on the technicalities of what the law does or does not require? Or, as I think you’re suggesting, can lawyers be more like wise counsellors, helping their clients to understand those broader societal and environmental impacts of a activity? Do you have any further thoughts that you’d like to add on that question?
PF: I think in a way, you gave me the pointer to answer. What type of lawyer are we? And it’s perhaps not just about being a lawyer, but the way we execute our profession. You bring into your profession also your values, who you are and good governance, someone can argue. It starts with at least doing what’s basic, according to the law. But good governance is also understanding the underlying purpose of the regulations or guiding principles that have been put in place or how the company’s response to those regulations can have more broad, broader implications for the businesses in terms of investors’ response, reputation with customers and the general public, and the positive impacts that compliance can have on businesses, the environment in others.
You are first a person, and then you are someone that delivers an opinion. I’m going to repeat that. You are first a person and then you are someone that delivers an opinion. Legal professionals don’t just say what's allowed, they shape what’s possible by bringing values, judgement and humanity into the practice of law to help leaders define what good means in the context of now.