It doesn’t matter what you think of climate change – the biggest threat to our future, or the biggest hoax to impoverish us. The growing law and regulation around climate change is already bringing changes to the legal profession, changes of which we are a part, whatever our views. Here is an attempt to sketch the briefest outline of how it affects us now, both our firms and the advice we give our clients. In other words, it has everything to do with us, whether we agree with it as a prediction of our future or not.
The UK government promised us at the end of last year its ‘Ten Point Plan for a Green Industrial Revolution’, with green ships, green buildings, green finance, green public transport, green jobs and green technology. This will touch nearly all areas of life, and so inevitably the advice that we provide to our clients.
The European Commission has also just published its enormous ‘Fit for 55’ climate package, which will similarly cover changes to everything from cars, home heating, cheap holiday flights, to whether jobs will continue to exist at all. It still has to go through its legislative process, but it does not take much imagination to see the role of lawyers at every step of the way. Of course, this will be in the EU, not the UK, but it is yet another example of how the green legislative revolution is in full flow, with laws, laws, laws, and their consequent impact on clients.
There are two aspects to this: how it affects your practice as a business, and how it affects advice given to clients. It deeply affects both areas, as follows.
To start with advice given to clients, many solicitors are obviously already giving climate-related advice to clients. For instance, using financial services, UK financial regulators and supervisors have indicated that regulated companies and their advisers are expected to start identifying, managing and disclosing climate-related financial risks. In-house lawyers in the financial sector must advise on a wide range of reporting guidelines, including the Streamlined Energy and Carbon Reporting requirements, Equator Principles, the UK Government Green Finance Strategy, the UK Stewardship Code and the UK Government Green Finance Strategy.
Similarly, pension fund trustees are expected to identify and manage climate risks in their investment portfolios and inform stakeholders accordingly.
It is easy to think that this is something which affects only large firms. No, certainly not. The recent terrible floods in Europe (and also the heat domes in Canada and the US) provide some insight. Ordinary people and small businesses have suffered grievous losses. They are unlikely to go to big city firms. It is not a foreign problem, either: we have had repeated serious floods in this country, if not on the scale of what recently struck Germany and Belgium. Smaller firms will now be expected to advise on legal risks related to greater flood risks, air quality and environmental issues in relation to development transactions, which may have an impact on property values, and therefore on investor and insurer risks.
Next is how climate change affects law firms as a business. Here is one example. In order to achieve net-zero carbon emissions, leading business organisations, governments and public bodies will be looking beyond their travel budgets and building measures, to ensure compliance by supply chains with similar goals, and to ensure the management of sustainability in general. Such measures will extend to nearly all solicitors in due course, including, as one example, to smaller firms on banks’ lender panels.
Indeed, commitments towards reducing carbon emissions is likely to become a condition of remaining on retainer for a large number of suppliers, and so all solicitors will need to take steps to remain competitive, quite regardless of compliance with future laws. There is already a good deal of advice available to solicitors for how to make law firms sustainable in these terms. The Legal Sustainability Alliance is a good place to start.
Here is a brief list of other areas for small firms: insurance (asset owners need to understand potential risks in relation to insurability of assets, and contract terms need to be explicit about where climate risks reside); conveyancing (flooding and insurability as mentioned, but also business interruption and rent suspension, plus environmental performance); construction (energy performance, manufacturing processes, lifecycle maintenance and the ability to repurpose and reuse materials).
The conclusion is that, for all of us, whether believers or deniers, the work related to climate change is already here and needs to be dealt with. For some, it is an opportunity to help save the world. But even for cynics, it provides at the very least huge opportunities for new growth, since there are new laws and regulations all the time.
Jonathan Goldsmith is Law Society Council member for EU matters and a former secretary general of the Council of Bars and Law Societies of Europe. All views expressed are personal and are not made in his capacity as a Law Society Council member, nor on behalf of the Law Society