As a retired solicitor, I receive a regular email from the Law Society Gazette, drawing my attention to stories appearing in the online version of that publication. This week, one story in particular attracted my attention:

What does climate change mean for your practice?

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.

It’s an interesting sketch of the implications, not of climate change per se (after all, what’s the climate going to do to Smith & Jones solicitors of Leges Parva, Midlandshire, any time soon?), but of the increasing tranche of legislation, both national and at EU level, and of policies adopted by big business and regulators with a view to nudging behaviour. In short, it provides opportunities for lawyers, as well as burdens for businesses.

Opportunities for Solicitors

The UK Government’s Ten Point Plan for a Green Industrial Revolution and the EU’s “Fit for 55” climate package, both have implications for the legal advice to be given to clients. Just because the UK has left the EU, it doesn’t mean that UK solicitors can ignore EU legislation – plenty of clients do business there and need to understand their legal obligations. Of course, it’s very much worth noting that every opportunity for lawyers to advise clients involves with red tape and business burdens for their clients.

In the context of financial services, for example, 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. Reporting guidelines are already vast, and include:

Streamlined Energy and Carbon Reporting (SECR) requirements;

Equator Principles;

UK Government Green Finance Strategy;

the UK Stewardship Code; and

the UK Government Green Finance Strategy.

Being retired, I confess I hadn’t heard of half of these. Take SECR as a single example. The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 implement the government’s policy on SECR. They even apply to Academy Trusts, as well as to large unquoted companies that have consumed (in the UK), more than 40,000 kilowatt-hours (kWh) of energy in the reporting period. The Government’s website claims:

The 2018 Regulations are designed to increase awareness of energy costs within organisations, provide them with data to inform adoption of energy efficiency measures and to help them to reduce their impact on climate change. They also seek to provide greater transparency for stakeholders.

There’s more:

Large companies, as defined in sections 465 and 466 of the Companies Act 2006, are companies that meet two or more of the following criteria:

turnover (or gross income) of £36 million or more,

balance sheet assets of £18 million or more,

250 employees or more.

Note that if academy trusts report at a group level, the thresholds should consider these figures at aggregate level, including subsidiaries.

In assessing whether the 40,000 kWh threshold is met, academy trusts must consider, as a minimum, all the energy from gas, electricity and transport fuel usage in the UK that they are responsible for.

As a minimum, any organisation caught within the above definition must publish

…its annual UK energy use (in kWh), as a minimum relating to gas, purchased electricity and transport fuel and associated greenhouse gas emissions (in tonnes of carbon dioxide equivalent (CO2e))

I thought part of this Government’s rationale in leaving the EU was to reduce red tape and to create a more business-friendly environment, with a view to growing jobs and the nation’s wealth. Confronted with the above reporting requirements (representing one small part of the Government’s climate red tape) I have to ask why anyone would seek to set up a business, grow a business, or even set up an Academy, given all that hassle, none of which is of any help to your business.

And that’s as it relates to businesses and academies. Pension fund trustees are also burdened, being expected to identify and manage climate risks in their investment portfolios, and advise stakeholders accordingly.

That’s not the end of legal opportunities (and risks), however. The Gazette also advises:

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.

Certainly there’s money to be made, but get it wrong and you could be looking at a substantial professional negligence claim.

How Does all this Affect Solicitors?

Well, if legal firms wish to remain on the panels of large clients, they may well find themselves having to tick lots of climate boxes. Large organisations, public bodies, banks, insurance companies, etc. are increasingly requiring those in their supply chain to share their climate objectives, so as to be able to demonstrate that they are “doing their bit” all down the line. Regardless of whether or not any particular law firm is legally obliged to take measures, keeping large clients who help to generate the firm’s profits may well involve “carbon” audits and an active demonstration of a “carbon-reduction” strategy. Remaining on the panels of banks may well involve a great deal of effort here.

Fortunately(!) help is at hand in the form of the Legal Sustainability Alliance (“The leading sustainability network for law firms and the UK legal sector”):

https://legalsustainabilityalliance.com/

There are two conclusions. The first is that offered up by the Law Society Gazette (whose official position is clear – note the reference to “deniers”):

[F]or 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.

Secondly, I’m glad that I have retired.

27 Comments

  1. So this is maybe the time to attempt to just ease off the stage and try not to attract too much attention….

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  2. Writing as someone who would have been obliged to attempt to collect this data, I too am glad to be retired. My question is what is done with all this nonsensical reporting? Who compiles it and reports on the climate readiness of UK plc?

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  3. And I’m glad I am retired too. I had enough of this sort of thing putting together the ISO 14001 system for my company. The Law Society Gazette had it exactly right. Believer or otherwise, you end up having to do what you’re told.

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  4. I regret being retired because I enjoyed engaging with young minds. But I suspect the support I received from the majority of my environmental science school to take a different stance would no longer exist, and all would be devoted to telling an unchallenged story about the climate emergency. So perhaps I should be glad I’m now free from it all.

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  5. Recently, David R. Burton wrote to the Securities Exchange Commission explaining the hazards they will be taking on needlessly should they continue desiring to impose Climate Change Disclosures on publicly traded enterprises.  His document was sent to the SEC Chairman entitled Re: Comments on Climate Disclosure. His key points were:

    1. Climate Change Disclosure Would Impede the Commission’s Important Mission.

    2.Immaterial Climate Change “Disclosure” Would Obfuscate Rather than Inform.

    3. Climate Models and Climate Science are Highly Uncertain.

    3.Economic Modeling of Climate Change Effects is Even More Uncertain.

    5. The Commission Does Not Possess the Expertise to Competently Assess Climate Models or the Economic Impact of Climate Change.

    6.The Commission Has Neither the Expertise nor the Administrative Ability to Assess the Veracity of Issuer Climate Change Disclosures.

    7. Commission Resources Are Better Spent Furthering Its Mission.

    8. The Costs Imposed on Issuers Would be Large.

    9.Climate Change Disclosure Requirements Would Further Reduce the Attractiveness of Becoming a Public Company, Harming Ordinary Investors and Entrepreneurial Capital Formation.

    10. Climate Change Disclosure Requirements Would Create a New Compliance Eco-System and a New Lobby to Retain the Requirements.

    11.Climate Change Disclosure Requirements Would Result in Much Litigation.

    12.Material Actions by Management in Furtherance of Social and Political Objectives that Reduce Returns must be Disclosed.

    13.Fund Managers Attempts to Profit from SRI at the Expense of Investors Should be Policed.

    14. Duties of Fund Managers Should be Clarified.

    14.Securities Laws are a Poor Mechanism to Address Externalities.

    16. Climate Change Disclosure Requirements Would Have No Meaningful Impact on the Climate.

    17.Efforts to Redefine Materiality or the Broader Purpose of Business should be Opposed.

    18.  ESG Requirements will Make Management Even Less Accountable.

    The letter is here: https://www.sec.gov/comments/climate-disclosure/cll12-8914466-244728.pdf

    My synopsis is https://rclutz.com/2021/07/06/sec-warned-off-climate-disclosures/

    Of course, as you say above, that this path is unwise doesn’t stop it from generating lots of billable hours for lawyers and accountants.

    Liked by 4 people

  6. “[F]or 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.”

    Statements of this kind have now worked their way down the social layers to ordinary citizens who must make some kind of implementation in their work domains. For about two decades this kind of narrative has been propagated by presidents and prime ministers and UN elite plus many other primary sources of authority. And it has come up the other way too, from grass roots, via NGO’s such as Greenpeace and WWF, propagating for many years before Greta and XR. The narrative is now ubiquitous in the West.

    The text could not be clearer that a cultural narrative of certain planetary doom and corresponding salvation is in charge (‘save the world’), which is not supported in any way by mainstream science never mind any sceptical science. And that folks are either in this cultural club (believers), or they are ‘deniers’. Classic in-group / out-group, it’s what cultures do. In this case the deniers are offered a carrot for compliance instead of a stick, but it is more frequently the other way around.

    In the abstract, it’s pretty boggling that people can write stuff like this without realising that it is glaringly, obviously, and embarrassingly ‘religious’ in nature. But belief is blind, and the public have no climate literacy to help them understand that non-compliance to the increasingly burdensome and damaging (and sometimes bizarre) demands of this narrative, wouldn’t doom the world.

    Liked by 4 people

  7. Ron, a fine strike for rationality against the irrational burdens imposed by a cultural belief in doom. I wonder whether it will do any good, or whether the narrative will just roll on and crush any objections anyway 0:

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  8. “I thought part of this Government’s rationale in leaving the EU was to reduce red tape and to create a more business-friendly environment, with a view to growing jobs and the nation’s wealth”

    funny you should say that – that’s what I thought & hoped for as well – seems “save the planet” over rides that hope !!!

    Liked by 1 person

  9. Ron, thanks for the information. A more impressive list than my very short critique.

    When I was in practice (both in private practice and mostly in-house) I had the satisfaction of knowing that so far as my client or employer was concerned, I provided a useful service in return for my fees/wages – be that collecting money from an intransigent debtor, fending off a spurious claim that would have been expensive if lost, drafting a joint venture agreement for a collaborative and advantageous deal with a 3rd party business, obtaining a valuable licence that would help to increase profits, carrying out the conveyancing work for a property whose acquisition was important to the business. And so on. However, this “green compliance” work will cost businesses lot of money in fees to solicitors and accountants, with no obvious benefits to the business. Good news for solicitors and accountants; bad news for businesses. And utterly pointless.

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  10. I tend to see the imposition of Climate Change Disclosures as part of a wider problem within industry, since there has been for some time now a growing obsession with the importance of ‘governance’. Before I had retired, the rot was already setting in with the introduction of Corporate Social Responsibility. This started out in the form of benign PR bullshit but has transformed over the years into an onerous obligation to demonstrate how ethical standards are being met within an organisation. As Wikipedia puts it:

    “While once it was possible to describe CSR as an internal organisational policy or a corporate ethic strategy, that time has passed as various national and international laws have been developed and various organisations have used their authority to push it beyond individual or even industry-wide initiatives. While it has been considered a form of corporate self-regulation for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organizations to mandatory schemes at regional, national, and international levels.”

    Sustainable business operation looms large within the gamut of ethical impositions, but it by no means ends there. You can also see it in the current need to have a White Slavery Policy and a full range of policy statements regarding the protection of minority interests. The red tape that goes with these things is horrendous.

    I have to admit that when my company first entered the FTSE 500 I was approached by my boss and told I was to be the new CSR manager. I told him that I was happy to serve in matters of governance such as quality control, health and safety and security management, but I drew the line at getting involved with what I saw as nothing more than corporate virtue signalling. I think my refusal to do the job turned out to be a career limiter, but I have no regrets. I couldn’t bring myself to do something that had no inherent corporate value other than to provide a phoney basis for good public relations. I am really glad I’m out of it now. When I see the number of adverts that say more about a company’s alleged morality than it does about their product, I have to wonder what the workplace atmosphere must be like. For every body working on the production line there must be at least five bureaucrats employed to ensure they go to heaven.

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  11. “I have to ask why anyone would seek to set up a business, grow a business, or even set up an Academy, given all that hassle, none of which is of any help to your business.”

    Will the last person to leave the building please switch off the lights?

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  12. No Beth. You must switch off the lights whenever no one is in the room and gather the data that demonstrates how this policy is reducing the electricity bill, and hence saving the world. Oh, and make sure the report appears in a glossy brochure designed to project the required company image, advertising also how the brochure was sustainably produced. You will, of course, need to employ consultants for this.

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  13. It’s meritocratic corruption. A recurrent feature of Chinese history. They have had a bureaucracy based on competitive examinations for over 2500 years. What happens is that the bureaucrats come to believe that only they have the skills and wisdom to run the country, but in order to do that they increase the red tape to the point where ordinary live becomes stifled. This alway results in a rebellion. Such cycles have lasted between 150 – 200 in China.

    It is notable that it is around 170 years since competitive examination was first introduced for recruitment into the British civil service.

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  14. John,

    oh yes, the ‘make work’ theory, it’s so productive, bureaucracy maketh wealth, whoever thought it was something else?

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  15. Beth your typing is shot. When trying to write “bureaucracy taketh wealth” your finger must have slipped and you mistakenly typed an “m” writing “maketh” instead. Not surprised your faithful spell checker failed you; my evil one rejected both words.

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  16. Hard on the heels of the Law Society Gazette email I mentioned in the article, I have received today an email from the Law Society with regard to professional updates. This one offers a link to an article on the Law Society website headed “Getting started with ESG: climate change and your investments”.

    It seems, ultimately, to be a plug for the investment services of “Law Society strategic partner, Tilney”:

    https://www.tilney.co.uk/

    The blurb the Law Society offers to solicitors on Tilney’s behalf includes stuff like this:

    “Climate change is one of the biggest challenges of our day and we are nearing the limits of our ability to mitigate its impact.

    Most of us now recognise the significance of this and, alongside commitments by nations, governments and industry, are on our own personal journey to make changes to the way we live our lives. As well as switching energy suppliers, opting for more plant-based food and getting on our bikes to help the planet, the impact of our investments – both positive and negative – is an area of increasing attention and activism, as we become alert to the profound difference we can make through our investment choices.

    The sums all of us collectively have invested in the UK – not to mention worldwide – are vast (UK occupational pension funds alone had a market value of £2.2 trillion at the end of 2019, according to the Office for National Statistics), so where we elect to invest our money can make a significant difference.

    And momentum is building here, as both institutional investors and individuals choose to move their funds, from oil and gas, for example, into more sustainable alternatives and companies underpinning the move to a low carbon world.

    While the motivation of many is to save the planet, it also increasingly makes sound investment sense. As an example, if global warming is to be restricted to 2 degrees centigrade, many fossil fuel reserves can never be used and so have no value – they will become ‘stranded assets’. This applies as well to infrastructure such as power stations, pipelines, chemical plants, cement and transport. Increased legislation can also have an impact on companies through, for example, the levying of taxes on carbon producers.”

    And it draws almost to a close with this:

    “Of course, you don’t have to choose and manage your own investments. An investment manager can work with you to build an investment portfolio that aligns with both your values and your objectives and then make day-to-day investment decisions on your behalf.

    Tilney has been successfully managing ethical and sustainable investment mandates for more than 15 years and has a dedicated central investment process for ethical and ESG screening. We are a signatory to the United Nations Principles for Responsible Investing and, in 2021, won the Best ESG Investment Strategy Award at the City of London Wealth Management Awards.”

    I don’t blame anyone for spotting a money-making opportunity, but blooming heck, there’s a lot of money uselessly swilling round “green cr*p”!

    Liked by 1 person

  17. @Mark – from your above quote “As an example, if global warming is to be restricted to 2 degrees centigrade, many fossil fuel reserves can never be used and so have no value – they will become ‘stranded assets’. This applies as well to infrastructure such as power stations, pipelines, chemical plants, cement and transport.”

    I remember a blog post which showed a barrel of crude oil graphic & how each % was used in our modern world/industries.

    I may be wrong, but at the time I thought rather than a ‘stranded asset’ whoever can supply this to a depleted market can charge a Kings ransom (maybe)

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  18. dfhunter – great link, thank you.

    I share your view that oil isn’t going to be a stranded asset any time soon. Quite apart from the many other uses of oil, even if the west were to continue down the road of committing industrial and lifestyle suicide, most of the rest of the world isn’t in a hurry to join in.

    The key word in that quoted passage is of course “if” – as has been stated many times, a word of only 2 letters, but – in terms of its huge implications – one of the biggest words in the English language. At the end of the day, the Law Society article is IMO little more than a puff piece for one of the Law Society’s “strategic partners”. A cynic might wonder if the piece linked to in the email from the Law Society Gazette, which I referred to in my article was anything more than a softening-up article to push Tilney’s services a few days later. I, of course, couldn’t possibly comment.

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  19. Disclosure: on re-visiting this article, I realised that the definition of large companies, as set out in sections 465 and 466 of the Companies Act 2006, had been inadvertently omitted, so I have just edited the article to include the definition, without which that part of it didn’t make sense. Apologies for the original error on my part.

    Liked by 1 person

  20. Mark, I know it would be a lot of work for minimal (!) reward. But it would be a fantastic resource if you could collect the critical paragraphs of all your Legal quotes wrt (catastrophic) climate-change compliance, into an organised data-base with full source IDs and links etc.

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  21. Andy, it’s kind of you to say so. Maybe a job for this winter if I don’t feel I have anything to contribute in the form of an article at Cliscep for a few weeks! I like stewgreen’s idea of a private wiki. I guess this website is a sort of public one for now. Part of my rationale in posting at Open Mic so much of the climate drivel published by the MSM, is to have a record of links to it for the sake of posterity. One day we will be vindicated!

    Liked by 2 people

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