They’re all at it. Last month I inveighed against my local building society’s campaign for its customers to supply their account details to a third party so that they can view and reduce the carbon footprint of their spending. This month, it’s the Law Society telling me how in-house lawyers “can fight the climate crisis”.
There was a time when the Law Society saw its role as promoting and regulating the interests of solicitors. The regulatory role was taken away from them some time ago and given to the Solicitors’ Regulation Authority, so solicitors might have hoped that the Law Society would make a bit more of an effort to look after its members. But no, it seems its role these days is to hector and promote the cause du jour. We are told:
In-house lawyers are key to shaping green initiatives within their organisations. To mark the approach of Pro Bono Week 2022 and COP27, Lawyers for Net Zero and the Chancery Lane Project share practical ways in-house legal teams can effect positive change against the climate crisis.
I spent most of my career as an in-house solicitor, and I (and, I’m sure, my employers) would have regarded it as profoundly wrong for me and my colleagues to agitate for our companies to adopt any political objective. Our job (and our professional obligation) was to act in the best interests of our client/employer (and its shareholders), whilst upholding professional standards, and complying with the rules and regulations set down by our professional body.
Now in-house lawyers and their teams are urged “…to help ensure their organisation’s good intentions are turned into meaningful and rapid climate change action.” In-house lawyers, we are told, “…have a rare, holistic view of the company and access to a wide network of senior leaders. This gives them the ideal platform to have real influence within their organisation.” Furthermore:
Assessing risk is an essential part of an in-house lawyers’ role. The climate crisis is the biggest risk that businesses – and society – have ever faced, and in-house lawyers are perfectly placed to highlight the risks and opportunities that net zero presents.
At this stage, I have read only the opening four paragraphs of an article titled “Practical ways in-house lawyers can fight the climate crisis”, and I have already spotted my professional body asserting as fact a number of political opinions. First is the assumption that we are suffering from a “climate crisis”. Second is the assumption that in-house lawyers (inevitably just those in England and Wales, at that, since they are the ones “represented” by the Law Society of England & Wales) can effect positive change against the alleged crisis. Thirdly, we are told that the “climate crisis” is the biggest risk that society and businesses have ever faced. I assume that two world wars, the Black Death and much else were just minor inconveniences. It is assumed that “green initiatives” and addressing the “climate crisis” are one and the same thing (some of us are deeply concerned that policies driven by advocates of climate change action are the antithesis of “green”). Finally, we are told – and it is implicit that this is a good and necessary thing – that in-house lawyers can help ensure that their employers take “meaningful and rapid climate change action”.
Lawyers for Net Zero
Next we are introduced, with great enthusiasm, to Lawyers for Net Zero. A cynic might think that they drafted the Law Society article, given that their website says things like:
The inspiration behind Lawyers for Net Zero was the recognition that there is a massive, but largely unrecognised, opportunity for in-house lawyers to be a critical interface, who can support their organisation to deliver significant and rapid climate action.
Their website introduces us to the Campaign for Greener Arbitrations (“Driving sustainable change in arbitration”); Legal Sustainability Alliance (“Time is running out to solve the Climate Crisis”); the Global Alliance of Impact Lawyers (“Connect, Learn, Lead”); ClientEarth (“We use the power of the law to protect all life on Earth, combining thousands of individual voices into one powerful force for change”); and Net Zero Lawyers Alliance (“Mobilising commercial law firms and lawyers to accelerate the transition to net zero”).
They also link with another organisation who are pushed at us by the Law Society article:
The Chancery Lane Project
Its website offers up for use 120 model clauses, 54 glossary entries and 8 tools. They are sponsored and supported by Climateworks Foundation; Laudes Foundation; Quadrature Climate Foundation; Generation Foundation; and the Centre For Innovation In Voluntary Action.
I can’t be bothered to analyse all their websites, and will leave it to you to if you are so motivated. For now, it’s enough that we begin to gain an insight into just how many of these organisations exist and how deeply interlinked (and influential) they all are.
Returning to the Chancery Lane Project, the Law Society is keen to push its “green” lease clauses at us. In principle I could fairly readily be on board with this:
To achieve a property’s green potential – and to enjoy the associated benefits of lower running costs, a more comfortable working or living environment and a more marketable asset – parties to a lease should include green obligations, to ensure that their building is used sustainably.
However, as so often, the devil is in the detail. After a quick look at some of the clauses I am not so enthusiastic after all. First, there is Aatmay’s Clause (“Sustainable and Circular Economy Principles in Leasing Arrangements for Repairs and Alterations”). It sounds reasonable enough, put like that, but a reading of the clause gives pause for thought. Before you even get into the meat of it, its recitals require both landlord and tenant to have signed up to the Race To Zero ; to have a common intention to “achieve their respective organisational net zero targets”; to “align with the objectives of the Paris Agreement (in particular pursuing efforts to limit global temperature increase to 1.5 degrees Celsius above pre-industrial levels and achieving net zero or net negative emissions by 2050 or sooner)”; and to do so in a manner that promotes “a just transition to a low carbon economy and results in at least a 7% reduction of greenhouse gas emissions year on year.”
Having been retired for some time, perhaps I am hopelessly out of touch. However, I regard a clause like that (and that’s before even looking at the operative parts of the clause) as massively onerous on both parties, and could render both the freehold and leasehold interests less valuable and less marketable. (But note the spin encouraging use of the clause, claiming that it will help to create a “more marketable asset”!). I won’t delve into the details of the clause as it’s lengthy and technical, but if you’re interested, the embedded link above will allow you to take a look. Suffice it to say that the defined terms include “Adverse Climate Effect”; “Efficiency Objective”; “Efficiency Standard”; “Embedded Carbon”; “GHG Emissions”; “Greenhouse Gases”; “Net Zero Target”; “Offset” and much more. You get the idea.
Next there’s Hannah’s Clause. This “allows owners to include the costs of improving the environmental performance of leased buildings in the service charge costs (where such works are not otherwise required by statute)”. Service charges are often a major bone of contention between landlords and tenants, with tenants regularly complaining that they are too open-ended and allow landlords to impose costs on them in an uncontrolled way. Quite why anyone, least of all the Law Society or solicitors acting for a tenant, would think it’s a good idea to add to the costs the landlord can load on to a tenant via the service charge is beyond me. In answer to the question “why use this?”, the answer offered up is:
Hannah’s Clause helps landlords to: (i) address investor concerns about climate risk and compliance with environmental legislation (e.g. Energy Efficiency Regulations); (ii) respond to tenant demand for efficient, healthy and green buildings; (iii) enjoy increased profitability through higher property values and return on investment; (iv) pass cost savings to tenants; and (v) incentivise tenants to use the property efficiently.
However, you need look no further than some of the terms contained in the additional definitions accompanying the clause to see how this could come back to bite an unwary tenant – “Adverse Climate Effect”; “Carbon Dioxide Equivalent”; “Embedded Carbon”; “Environmental Performance”; “Finite Power Source” (“means a power source which is reliant on Hydrocarbons”); “Green Infrastructure”; “Greenhouse Gases (GHGs)”; “GHG Emissions”; “Hydrocarbons” (“means a class of organic chemical compounds predominantly consisting of hydrogen and carbon and which includes fossil fuels such as coal, crude oil and natural gas”); “Renewable Energy Sources” (“means naturally replenishing non-fossil sources of energy, including but not limited to hydropower and tidal power, hydrothermal power, aerothermal power and geothermal power, wind and solar”). [Drafting note: Consider specifically excluding nuclear and regenerative biomasses (wood, municipal waste, biomass and landfill gas, ethanol, biodiesel) so as to limit to truly naturally replenishing sources and avoid sources generated by incineration which has significant GHG output and contributes to other forms of small particulate air pollution.]; “Sustainable Procurement”; and “Waste Management Plan”.
I’m sure you get the picture. Again, that’s just the definitions – the clause itself is too long and technical for the scope of this article. A single clause that is almost as long as some old leases, and which imposes considerable costs on the tenant at the say so of the landlord, isn’t necessarily a good thing to encourage your tenant client to sign up to. Yet the spin put on it (above) talks about responding to tenant demand, passing cost savings to tenants, and “incentivising” tenants to use the property efficiently. Yeah, right. It sounds like the sort of “incentive” – hitting them in the pocket – that will see people in their millions turning the central heating down – or off altogether – this winter.
Next is Lotta’s Clause. We are told:
The clause raises renewable energy at the outset of commercial relations and in lease negotiations between landlord and tenant. As an operative provision of a lease, Lotta’s Clause delivers real impact by reducing the carbon footprint of the parties and the adverse environmental impact of leased buildings in landlord portfolios.
Well, a lot depends on whether it really is possible for a building, at this moment in time to be serviced entirely by “renewable” energy. Of course, it can’t. The electricity coming out of a plug in one of these buildings is the same as the electricity coming out of the plugs in my house And so one of the new definitions we see as part of this clause is one for a “REGO Certificate”, being a certificate of “Renewable Energy Guarantees of Origin”.
There’s more, but I’ll stop there, to prevent eyes glazing over any more than necessary.
I’m sure that the lawyers involved in these organisations, and the people at the Law Society, are acting with the best of intentions. They presumably sincerely believe all this stuff. However, it seems to me that some of the justifications for urging this behaviour on in-house lawyers involves massive spin and in some cases turning reality on its head. I am absolutely convinced that leases containing these clauses will be less valuable and less marketable than those without them. Of course, it could be that the point will arrive when legislation ramming net zero down our throats means that the opposite will be the case. However, that will be down to politics, and I firmly believe that it is not the Law Society’s place to be urging this behaviour on its members.
The other point to note is how it is now taken as read, without even so much as a modicum of intellectual curiosity regarding the allegation, that the “climate crisis is the biggest risk that businesses – and society – have ever faced”. The Law Society states it as fact. Its members are supposed to accept it without question. This view is deeply embedded in the establishment. It is going to take some shifting. Possibly only a Brexit-style revolt by the long-suffering public fed up of the negative impact on their lives of net zero will achieve a reappraisal. And even then, as with Brexit, the establishment won’t readily accept defeat. As I have mentioned before, in the western world generally, and in the UK in particular, we are subject to net zero democracy.