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ESG in the DNA – embedding green purpose in law firm business

2024 marks the third year The Legal 500 will be researching firms’ dedication to sustainability matters and contributions to a green transition. With preparations for the next round of Green Guide editions underway, the depth of information gathered to date presents a unique opportunity to look back, review the results of our efforts, and examine the current state of play with regards to law firms, sustainability and their climate action.

The past year has seen another push towards acknowledging the impact of climate change on lawyers, the role of lawyers in addressing the climate crisis, and the need to work towards climate conscious legal practice. In the UK, in March 2023, a group of lawyers signed a declaration of conscience, ‘Lawyers are Responsible’, calling on legal professionals to act urgently to address the climate and ecological crises, advance a just transition, and withhold services supporting new fossil fuel projects. In April 2023, this was shortly followed by the Law Society issuing guidance for solicitors on incorporating climate change considerations into their practice. Not long after in June 2023, a group of law firms in the UK launched the Legal Charter 1.5, a landmark initiative urging and supporting firms to respond meaningfully to the climate crisis. Similar actions have sprung up elsewhere around Europe and further afield.

In turn, this past year, the Green Guide has seen a significant expansion of submitting firms wishing to participate in our research, with submission numbers almost doubling in various jurisdictions. The most recent 2024 EMEA Green Guide saw a 48% increase in the number of submissions and a 42% increase in the number of firms featured. In the 2024 UK Green Guide, we had a 48% growth in featured firms after receiving an 11% increase in submissions. In our Asia-Pacific edition, the number of firms included rose by 74% and submitters by 34%, while in Latin America both featured and submitting firms more than doubled.

Around the world, an increasing number of firms are waking up to the importance of ESG, not only in terms of creating a dedicated client service offering, but also in terms of their own internal operations.

This is of course a business imperative for many firms, with ESG legal advice hot in demand and sustainability credentials good for the brand. Indeed, ESG can strengthen a firm’s reputation, as well as benefit recruitment and retention. But it also comes with risks. As sustainability and climate consciousness are gaining more attention, so is greenwashing. While law firms will see the challenges their clients face in connection with the increased scrutiny on false sustainability and environmental claims, they too are not immune to potential allegations.

On a green mission

During our research for the Green Guide, while we have witnessed an expanding range of firms engaging with sustainability matters, we have also observed an – albeit still small – but growing number of firms for whom ESG is not just business but who truly want to do right by society at large.

Often these are young or newly established firms, who have taken the opportunity of launching a new venture to purposefully write ESG into their DNA. One pioneer is Hong Kong-based Ben McQuhae & Co, which launched in 2021 as a commercial law firm with an explicit focus on ESG and sustainability practices. Self-defined “lawyers for tomorrow” who want to build a sustainable future, the team provides legal support only to projects which make a positive impact through alignment with the UN Sustainable Development Goals (SDGs). In order to enforce this, the firm has developed an SDG tracker to assess and measure the impact of its work against the SDGs. Its work is matched by serious external engagement in ESG thought leadership and an internal commitment to become a carbon net zero firm.

2021 also saw the launch of Sustainable Law in Denmark and 1,5 in Norway. In both cases, the name says it all: the Danish boutique was founded by project development expert Merete Larson who has based her entire business model around people, planet, and profit. 1,5, meanwhile, is an independent and specialist firm established by Jens Naas-Bibow, former head of the renewables department at Thommessen, and Frode Støle, a former judge at the Oslo District Court, with a focus exclusively on renewable energy, infrastructure and sustainability. Viewing law as a tool to help clients combat climate change, it aims to contribute to the 1.5-degree goal via its work.

In the UK, two new firms both launched in 2022 which have committed themselves to building a sustainable future. Paxus, which was founded by ex-Allen & Overy partner Suzanne Spears, was established to provide representation at the intersection of business and human rights, including addressing the climate crisis from a human rights angle. The firm aligns itself with the Law Society’s Climate Change Resolution and has signed the Greener Arbitrations Pledge.

Pallas Partners, another a disputes-focused boutique, was launched by former Boies Schiller Flexner London head Natasha Harrison. Despite its focus on commercial and financial disputes, it has taken on various clients and mandates driving positive change in society and the environment while also committing to the Campaign for Greener Arbitration as well as the Greener Litigation Pledge.

The latest addition to UK-based firms with a grand vision is Gen R Law, whose mission statement is to change the future for the next generation. Joshua Domb, previously a white collar crime and investigations associate at international full-service firms, envisions his new firm to practise law through the lens of addressing climate change, with specialist climate change, environment and green-tech expertise embedded in every practice area. As doors opened in March 2024, he is initially assisting clients with establishing a robust ESG programme by providing board training.

But it is not only a new generation of law firms innovating with new business models. Established firms are also trying to make a difference, such as Burges Salmon in the UK. An early adopter of measuring, managing and reporting on its emissions (since 2008), over the past years, the firm has taken its values to the next level with a rigorous and transparent approach to responsible business, implementing comprehensive measures across all three segments of E, S and G.

City firm Bates Wells has a particular focus on charities and social enterprises, therefore it is not entirely unsurprising that it sits among the more purpose-driven law firms, demonstrating a serious commitment to reducing its impact on the environment and supporting a just transition to net zero. Backing its ethos of putting profit and purpose on an equal footing, the firm was the first in the UK to be certified as B Corp in 2015.

That same year, Lux Nova Partners launched in the UK as a team of senior lawyers with no offices but one common purpose: advising communities, businesses and governments on clean energy, circular economy and nature based solutions, and an explicit policy of never supporting the fossil fuel industry.

Noteworthy are also two other litigation firms which aim to have a positive impact on the environment through the cases they bring. Pogust Goodhead was created specifically to address environmental wrong doings committed by corporations. The class actions law firm’s origins are tied to the Volkswagen diesel emissions fraud claim and the representation of the victims of the 2015 Mariana dam collapse in Brazil against BHP, and it has secured several precedent setting rulings. Its mission to help individuals, groups and businesses acquire access to justice is inextricably linked to its genuine commitment to the green transition.

Similarly, Leigh Day, despite its origins as a specialist personal injury firm, is now also at the forefront of representing claimants in landmark environmental litigation cases which often lead to crucial reforms in legal frameworks governing the protection of the environment, biodiversity, and wildlife. The firm has also led on some of the biggest group litigation cases, such as the Dieselgate scandal, and has brought the first cases which defined the law for how multinational corporations based in the UK could be held accountable for pollution and massive environmental degradation.

Elsewhere in Europe, for independent Swiss firm id est avocats, advising on green and ESG mandates is not only a growing line of business, but the team has made it part of its mission, consistently advocating for sustainable and responsible business practices and actively supporting green, impact, and ESG initiatives in the country. Its commitment is verified: The firm has also been a B Corp certified business since 2022.

In Austria, environmental boutique Niederhuber, given its background and focus on environmental issues, quite naturally and without much fanfare lives and breathes the green transition. Its dedication to climate action extends from enabling environmentally friendly and sustainable projects for its clients to shaping the legal policy discourse in the country. Forming alliances with the like-minded, the firm has an informal partnership with Austrian procurement specialists Heid & Partner, who specialise in and are big proponents of green procurement. A self-described life cycle law firm, it has built “360 degree sustainability” into its advice from start to finish of every client’s project.

In Germany, von Bredow Valentin Herz lives and breathes green energy. Similar to Lux Nova in the UK, the Berlin-based boutique is not only a specialist in renewable energy but also driven by the conviction that we urgently need to reduce dependence on fossil fuels and implement a comprehensive energy transition. Since the founding of the firm, it has cooperated with the Research Centre for Sustainability and Climate Policy.

Another similar outfit – an energy boutique focusing exclusively on the energy transition – is Angulo Martínez in Colombia. Experts in energy, climate change and sustainability, the firm’s entire business approach is focused on sustainability and helping clients navigate the green transition.

Colombia also houses Mendoza Abogados, a finance boutique founded in 2018 which only advises on projects utilising clean technologies to minimise their negative environmental and social impacts while furthering the government-promoted renewable energy targets. Proud of its high ethical standards, the firm is committed to helping clients develop sustainable projects, promoting ESG factors, and advancing the green transition in the country.

Lastly, in the Dominican Republic, boutique firm Santroni Parsons has also made sustainability its core concern. Its sustainability specialists lead on client work pursuing green development within the tourism industry. While aiming to make the development of investment projects legally and environmentally viable from a compliance perspective, sustainability is considered the main objective.

Fewer emissions? More transitions!

The above mentioned law firms do not form a comprehensive list of those who have truly dedicated themselves to operating a business with the climate emergency in mind, and are merely some of the players we have come across during our research for the Green Guide. There will be other entities which have taken similar steps. There will also be others who have implemented serious and commendable science-based measures to achieve net zero; others with certain teams and departments handling important and impactful work towards a more sustainable planet; and individual lawyers at other firms who are personally committed to climate action. Yet law firms as a whole with ESG inscribed in their DNA remain a small minority.

While more and more firms are putting environmental and sustainability policies in place when it comes to their internal operations, and the bigger demand for sustainability and climate change-related advice has also created growing service offerings in this space, few firms are considering the environmental and climate impact of the work they undertake for clients.

As unsubstantiated green credentials will increasingly be put under the lens, the concept of advised emissions will gain in importance. These are emissions not directly generated by the law firm itself, but generated by the advice given by the firm to its clients. Looking into the future, as businesses are going to be held increasingly accountable for their contributions to the climate crisis, law firms not taking into account their advised emissions may very well start to have the adverse effect of undermining firms’ sustainability efforts elsewhere.

In other words, firms are continuing to take on mandates connected to high-emitting activities while at the same time promoting their sustainability practices. The next big transition in firms’ sustainability journeys will require a closer look not only at operational emissions – which will be comparatively small – and capacity building in relevant areas of practice, but ensuring the provision of climate-aware advice across the board.

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Raising the Bar: The Role of Barristers and their Chambers in the Climate Crisis and Green Transition

The Bar holds a unique position in the fight against climate change, biodiversity loss, and in driving the green transition. Barristers’ specialist legal knowledge and their physical presence in the courtroom empower them to advocate for cross-sectoral change required to deal with these multifaceted issues.

The following feature outlines some key trends when considering the Bar’s engagement with the climate crisis and green transition. The first section highlights some particularly influential work, including reference to climate and environmental litigation against both state entities and corporations as well as complex disputes and challenges to specific energy projects. The second part addresses Chambers’ and Inns of Court’s sustainability journeys and some of the challenges and opportunities specific to the Bar. Accompanying the analysis are specific examples of the above from 39 Essex Chambers, Cornerstone Barristers, Doughty Street Chambers, Matrix Chambers and Twenty Essex. These London-based chambers have demonstrated a clear focus on work that mitigates climate change and promotes sustainability backed by strong internal green initiatives and best practices.

Featured Chambers

39 Essex Chambers

Cornerstone Barristers

Doughty Street Chambers

Matrix Chambers

Twenty Essex

Contribution to key cases

There has been a significant rise in climate change-related disputes, with the number globally having more than doubled since 2015. Citizens and NGO groups are increasingly utilising the law to challenge state structures on their insufficient action in tackling climate change as well as corporate actors for their role in accelerating the climate crisis. Also inevitably connected and of significance is the upsurge in environmental lawsuits which focus more directly on matters concerning biodiversity loss and pollution.

Many landmark cases have taken place in European courts such as the Urgenda climate proceedings against the Dutch Government in 2019 in which 900 Dutch citizens sued the government for not acting sufficiently on the climate crisis. The judgement was of particular significance as it confirmed the threat that climate change poses to human rights. Cases such as this are also a catalyst for societal change and can have a domino effect (whether they are successful or not). The Urgenda case was as much about challenging the state’s passive inaction as it was about its failure to fulfil existing climate commitments, and actively contributing to human rights violations of its citizens. In the years since Urgenda’s victory in the Netherlands, similar cases have cropped up across the world and barristers have been in a unique position to advocate for green change on behalf of their clients.

  • At Matrix Chambers, public lawyer David Wolfe KC acted for Friends of the Earth between 2021 and 2022 in its challenge to the legality of the Government’s Net Zero Strategy whilst energy and environmental expert Jessica Simor KC acted on behalf of Client Earth. The challenges were successful with the court ordering the government to produce a new strategy by March 2023. This is one of the biggest climate change cases in the UK to date.
  • In March 2023, Jessica Simor KC who operates from Matrix Chambers represented more than 2,000 elderly Swiss women in the first climate change case heard before the European Court of Human Rights. The claimants argue that the Swiss government’s response to climate change is inadequate and has negatively impacted their health. The ECtHR can be expected to reach a decision by the end of 2023 at the earliest.
  • Sam Goodman, who is a barrister at Twenty Essex, is acting for Client Earth in one of the most significant commercial litigation cases in the English court which will examine the Board of Shell PLC’s net zero strategy. The claimant alleges the Board is in breach of their director’s duties in adopting an irrational strategy and failing to prepare the company for net zero.

In addition, the green transition has inevitably been accompanied by more complex disputes concerning energy projects. These can range from challenges by environmental NGOs to proposed and existing fossil fuel projects to conflicts between competing renewable energy projects, which are also important to resolve to prevent critical delays to the energy transition.

  • Planning and environmental law specialists Richard Harwood KC and Celina Colquhoun from 39 Essex Chambers are acting for Orsted Hornsea Project Four in respect of the conflict between their offshore wind farm scheme and BP’s major carbon capture project; both are planned on the same site in the North Sea.
  • Estelle Dehon who operates from Cornerstone Barristers is representing South Lakes Action on Climate Change in the statutory review of the granting of planning permission for a new coal mine extending under the seabed in Cumbria. The High Court will hear the legal challenge in October 2023.
  • Climate change and human rights specialist Tim Cooke-Hurle from Doughty Street Chambers is instructed by Global Legal Action Network as sole counsel to mediate ongoing proceedings before multiple NCPs and the OECD regarding serious human rights abuses and environmental pollution at the Cerrejón coal mine in Colombia. Investigations into BHP, Anglo-American, Glencore and ESB are ongoing.
  • At Twenty Essex, Monica Feria-Tinta is assisting ClientEarth (on behalf of Inclusive Development International) in the complaint against the insurance broker firm Marsh regarding the proposed East African Crude Oil Pipeline by Total Energies set to be the longest heated crude oil pipeline in the world. The claimant alleges that in providing insurance, Marsh has failed to meet the standards for human rights and environmental due diligence under the OECD guidelines.

Barristers’ extensive expertise is also being utilised to reassess how the legal profession itself operates when faced with the gravity of the climate and ecological crisis. Doughty Street Chambers’ Margherita Cornaglia was instructed by The Good Law Project to draft a public letter which raises concerns over the ethical and legal issues regarding the role of lawyers in the context of the climate and ecological crisis. More specifically, the letter points to withholding professional services in the case of supporting new fossil fuel projects and acting against peaceful climate protestors. In March 2023, many lawyers including 18 barristers signed the declaration, which has resulted in significant backlash. Opponents claim that these actions constitute a breach of the ‘cab rank rule’ which prevents barristers from refusing work based on their own beliefs.

Greening the Bar

It is important for barristers and their chambers to recognise the role they play in the climate crisis both inside and outside of court. Attracting young talent is more important than ever and the extent to which Chambers and Inns of Court are undertaking their own sustainability and net zero journeys is undoubtedly a critical factor for those embarking on a career with The Bar.

Nevertheless, for barristers and their chambers, the net zero transition comes with a specific set of challenges. Approximately 80% of barristers are self-employed, meaning the vast majority lack a formal management structure. This presents limitations when it comes to enforcing sustainable behaviours within chambers. Take work travel, for example; many barristers can themselves decide whether they go by train or plane, and if, opting for the latter, whether this is by first-class, business-class or economy. For context, a long-haul first-class trip emits around four times the amount of carbon dioxide into the atmosphere than the same trip in economy. In addition, compared to law firms, chambers have relatively fewer employees able to focus their attention on sustainability measures. Numerous chambers also operate from historical premises such as in the Inns of Court, preventing certain modernisation efforts focused on improving the energy efficiency of buildings.

Although some of these obstacles may require a more existential rethink of how The Bar operates – something no profession seems immune from amid the climate crisis – there are certainly achievable measures chambers can take such as switching to sustainable suppliers and energy providers, reducing paper use, and encouraging more climate-conscious behaviours of its members and staff. In March 2021 the Bar Council launched the Bar Sustainability Network to help chambers ‘transition to a more sustainable way of working’. Members benefit from a range of support and guidance including free use of the network’s carbon calculator tool.

  • 39 Essex Chambers’ green strategy and committee is made up of both staff and barristers and has implemented various green initiatives focusing on improving its building, operations, and behaviours. The building itself is rated ‘excellent’ by BREEAM; it is fitted with bat boxes to encourage biodiversity and has a green roof with solar panels to lower emissions. To encourage more sustainable methods of transportation, staff and members are offered extra days of holiday for slower travel modes as well as a cycle-to-work scheme.
  • Cornerstone Barristers implemented a ten-year green agenda strategy focused on minimising its direct and indirect environmental impact. As early joiners to the Bar Sustainability Network, the staff and its members regularly share best practices with other chambers and use a carbon calculator to measure emissions and help to set reduction targets. The sustainability committee oversees its transition to renewable energy sources and greening the supply chain. There is a core focus on educating the workforce as part of its strategy, nudging members to make climate-conscious decisions.
  • Ben Cooper KC spearheads the chambers’ sustainability commitment at Doughty Street Chambers. Cooper founded the Green Team which is a collective of members and staff focused on decarbonising the practice in line with science-based targets. Cooper also founded the charity Dream for Trees, which the Green Team has supported by planting a new micro forest for schools in Camden and out of London.
  • At Matrix Chambers, the catering has been entirely vegetarian since 2018 as a means of reducing its environmental impact. It has replaced water coolers and single-use plastic cups in the office with tap water and glasses. The Green Committee established in 2019 has focused on improving the Chamber’s recycling scheme and has moved to a 100% renewable energy provider for the premises. The committee publishes regular carbon footprint calculations to track its progress towards a goal of net zero for its Scopes 1 and 2 emissions by the end of 2025. Other measures taken include internal campaigns to improve the behaviour of its staff and barristers.
  • Twenty Essex has opted for a Hive system at its premises at 18 and 20 Essex Street to best manage and monitor energy usage. In its expansion into 23 Essex Street, new meeting rooms have fitted filtered and sparkling water taps to eliminate the need for plastic bottles. It has also switched coffee machines to a brand that enables pod recycling. To reduce paper waste, the library team has corresponded with major publishers to advocate for increased digital provision so documents can be digitally numbered for court bundles and therefore do not need to be printed and scanned.

Scope 1, 2 and 3 emissions cover an organisation’s direct operational impact and the impact of its supply chain. Another element to consider specific to the legal sector is ‘advised emissions’ (also referred to as Scope 4, Scope X, or lawyered emissions). According to The Law Society, these can be defined as ‘emissions associated with the matters on which solicitors advise, as a proxy for understanding whether these are reducing, alongside their clients, in line with the IPCC recommendations’. This is a particularly important topic of consideration in the legal profession in which direct emissions are limited in comparison with, for example, the industrial sectors.

As referenced in the first part of this article, a group of prominent lawyers have committed to withholding their services in respect of supporting new fossil fuel projects and acting against peaceful climate protestors. These types of commitments may demonstrate what reducing advised emissions may look like in practice, however, given the cab rank rule, how attainable are these commitments to barristers? The rule, which is arguably at the heart of the profession, simultaneously works to prevent discrimination whilst protecting barristers from condemnation when working on unpopular cases. Although no action has yet been taken against the 18 barristers (including six king’s counsels) who have signed the declaration, those going against it may face serious consequences by the agency of The Bar Standards Board in the near future, and junior member signatories could experience significant setbacks in their careers. No clear answer is on the horizon, but these conversations are undoubtedly important, and when faced with the existential threat of the climate crisis, we can expect them to continue.

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The role of lawyers in the green transition: Six ways of making a positive impact

Climate emergency, ESG, sustainable investment, green transition – these terms have become buzzwords across many industries, not least the legal sector. 

As has been recognised by The Law Society, which in April 2023 released its guidance on the impact of climate change on solicitors, the legal profession can play a crucial role in mitigating the climate crisis. Whether they do this from an ethical point of view or simply to remain competitive in today’s market, legal professionals should leverage the influence they have in society – through lobbying, litigation, and legislation – to accelerate the green transition. 

Different legal actors can make different key contributions towards a more sustainable economy and planet. Whilst law firms bring external expertise, broad industry knowledge, and specialised resources, in-house lawyers can make use of the deep knowledge of their organisations, close collaboration with internal teams, and a wider focus on implementation. For the purposes of this article, I will be focusing on the role of private practice. 

Some law firms have been taking internal steps to mitigate climate change for quite some time. However, both clients and staff, in particular the younger generations who tend to have a greater awareness of environmental issues, are making clear that the implementation of eco-friendly office measures is simply no longer enough. 

Law firms are increasingly aware of this growing demand for action around climate change. As a result, they are taking further measures to demonstrate their commitment to a green transition, and sustainability-focused legal alliances are emerging around the world. In the UK, for example, the Chancery Lane Project aims to decarbonise legal contracts (see also point 3 below), and the recently launched Legal Charter 1.5 sets out eight principles, committing law firms to climate crisis mitigation.  

During my research, I identified six main ways in which legal professionals can make and, in some instances, have been making a positive impact, and accelerating the green transition. I also address in some more detail how lawyers are increasingly being scrutinised for their role in the climate crisis. 

1 – Legal advice, compliance and disclosure 

Lawyers will be crucial in enacting and enforcing the legal framework for a green transition. 

One important way lawyers can help is by providing competent advice to clients while taking into consideration how the latter can achieve their objectives in a way that mitigates the effects of climate change. This includes the identification of any potential risks that may arise from their clients’ operations which negatively contribute to the climate crisis. 

Another crucial task is helping clients understand their obligations and navigate the new wave of environmental compliance requirements – from emissions standards and sustainable business practices to accurate and transparent climate-related disclosures. This is particularly relevant when considering that in recent years the government has set legally binding targets and compliance requirements which will affect most if not all businesses. 

On top of that, almost a third of the UK’s largest businesses have pledged to eliminate their contribution to carbon emissions by 2050, and they will be looking to their lawyers to achieve those goals while remaining compliant and competitive. 

Lastly, another effective response law firms can take to help tackle the climate emergency is to engage in pro bono work – more often than not, organisations pushing for a green change are non-profit and/or under-resourced. 

2 – Driving climate-friendly policies 

Legal professionals have the necessary knowledge and power to influence policy and legislative changes. By actively engaging in advocacy and lobbying to shape environmental and climate-related regulations, they can make a real difference. Their force can be multiplied by collaborating with government organisations, NGOs and advocacy groups, as they can work towards the implementation of climate friendly policies and stronger environmental protection with experts in the field. Examples of this include developing new legal frameworks that promote sustainability, such as legal mechanisms for carbon pricing. 

By working with governments to build new climate and environmental legislation, legal professionals have a huge part to play in dictating how big and small corporations as well as individuals approach environmental matters. 

3 – Structuring sustainable deals 

Legal professionals can help pave the way towards climate crisis mitigation, one contract at a time. After all, lawyers are needed to make deals happen – that can mean anything from the financing of reforestation projects and formalities of green/blue bonds to getting the building permits for new fossil fuel plants (see also point 4 for a further discussion of choosing the right client). 

Lawyers can effectuate change through every contract they draft by promoting climate-aligned contracting. Incorporating climate clauses that promote eco-friendly operations in contracts helps the planet by enabling businesses to take the lead in transitioning to net-zero operations. Again, this is not only beneficial for tackling the climate emergency, but also for businesses to remain competitive in today’s market. Furthermore, it allows firms to deliver practical rapid action and respond to the climate crisis without having to wait for the government to enact laws, thereby taking the lead in a wider societal green transition. 

4 – Choosing the right clients 

While many law firms have long-standing environmental or climate change practices, this isn’t necessarily a positive sign indicating the firm is contributing to a green transition – often, those departments assist fossil fuel clients and pollutants with continuing their ‘ungreen’ business. Law firms are an essential pillar of the fossil fuel industry. They are the ones advising on and facilitating contracts for new pipelines and refineries, lobbying policymakers, and defending clients for environmental violations and/or crimes. 

Besides structuring sustainable deals, legal professionals can go a step further and choose to assist clients who are working towards decarbonisation and increased sustainability instead of those who work against it. 

While in an ideal fossil fuel free future, there will be no new oil, gas, and coal projects, it is equally important for firms to choose to help existing fossil fuel businesses transition to greener operations. These companies contribute a significant portion of the UK’s greenhouse gas emissions, and they are not just going to disappear in the near future, as we need materials such as gas for the increasing energy demand. 

As the increase in atmospheric CO2 is still not slowing down (but increasing by 3.5ppm per year), it is crucial that fossil fuel companies don’t keep operating in a way that is harmful to the environment, and law firms can assist them in their transition to greener technologies. Addressing emissions at the source should give us the opportunity to rapidly and drastically reduce carbon emissions, something we desperately must do if we are to have a chance of reaching net zero by 2050. Helping these businesses transition to greener practices can also enhance the public’s and investors’ confidence in them, attracting socially responsible investors and further promoting sustainability in the industry. 

5 – Litigation 

In cases where environmental conflicts arise, legal professionals play a crucial role in determining whether companies will be held accountable for their actions against the environment, including the climate. Lawyers can represent clients in litigation related to environmental damage, pollution, and breaches of environmental regulation, among others. 

Take as an example the recent legal action brought against Shell by Friends of the Earth and other plaintiffs. In 2019, they filed a lawsuit known as the ‘Climate Case’ against Shell, and won, in what is considered the first time a court has legally required a company to align its policies with the goals of the Paris Agreement. As a result of this case, companies worldwide are now in a position where they can be held accountable for the climate crisis, and they know their actions can have legal and financial consequences. This is a major driver for corporations to work towards a greener economy. 

6 – Spreading awareness 

Lawyers and law firms can position themselves as thought leaders and promote awareness around environmental laws and regulations as well as the importance of ESG and sustainability for businesses to clients, the general public, and aspiring lawyers. This can include the hosting of seminars, webinars, workshops, and other events as well as the dissemination of their expertise through publications, podcasts and other media. Many firms have also started engaging with law schools to educate students on the legal implications of the climate crisis. 

Scrutiny as a force for good 

As argued above, lawyers’ actions can have a positive or negative impact when it comes to the green transition, depending on their approach. This fact is increasingly being acknowledged: There is growing scrutiny on lawyers and law firms regarding their involvement in the climate crisis, as they are both being criticised for their fossil fuel and environmental degradation enabling practices or, conversely, recognised for their sustainability and climate change mitigation work. 

For example, The Law Students for Climate Accountability (LSCA) is an organisation created by students that seeks to amplify the roles and responsibilities of the legal industry in our current climate crisis. The group created the LSCA Law Firm Climate Change scorecard in order to understand the role the legal industry plays in the climate crisis. By ranking law firms according to how much fossil fuels work they have taken part in over a five-year period, the scorecard aims to draw awareness to the role that law firms play in creating, implementing, and safeguarding fossil fuel projects, as well as protecting the people who profit off them.  

Legal directories such as The Legal 500 and Chambers and Partners have also started putting climate change and ESG practices under the microscope within their law firm rankings. The Legal 500 Green Guide, which launched in 2021, aims to highlight firms which are making a positive contribution to the green transition. The global guide examines sustainability-related mandates across the entire range of legal practice areas, while also looking at law firms’ internal sustainability measures and initiatives as well as engagement beyond the legal work, such as the provision of resources and tools for clients, and thought leadership on the topic.  

Not only can guides like these help individuals, businesses and organisations identify and choose law firms who are truly experts when it comes to the green transition and have a genuine commitment to sustainability (or help avoid those who don’t), but they will also drive the legal sector’s deeper engagement with the role it has to play in averting the climate crisis and working towards a healthier planet.

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Navigating ESG Politics: The US Predicament

The increasingly global nature of business and cross-border regulatory compliance means that companies across the world are coalescing around the Environmental Social Governance (ESG) agenda. But in the US, ESG finds itself caught in the firing line between Republican culture wars and has become the focus of intense scepticism and scrutiny.

From South Africa to Finland, ESG is rapidly becoming accepted as a ‘must have’ for corporate credibility – a kitemark for good governance and a business’s overall success. Companies are embracing the new opportunities offered by ESG, such as a more diverse and inclusive workforce, as well as acknowledging the longer-term economic value of mitigating climate change risks.

Adrian Walker | Partner | Hogan Lovells

In contrast, many US firms are facing an anti-ESG movement or ‘war on ESG’. Highly politicised by nature, the backlash is affecting business mostly in Republican states where the introduction of anti-ESG bills is rising significantly. At least seven states have taken anti-ESG stances presented as ‘anti-boycott’ measures that aim to prevent state entities from investing in companies boycotting the fossil fuel industry. These initiatives have also taken the form of bills that restrict state funds from being used for ESG investment. Law firms have a unique perspective in the conflict as advisors on ESG and as businesses themselves.

On 4 November 2022, 51 large US and global law firms were directly approached in a letter from Republican Senators raising anti-trust risks associated with participation in ESG initiatives:

‘Over the coming months and years, congress will increasingly use its oversight powers to scrutinize the institutionalized antitrust violations being committed in the name of ESG and refer those violations to the FTC and the Department of Justice,’ it warned.

Republican-majority efforts to prevent investment managers from incorporating ESG into decision-making came to a head in March 2023 when President Biden issued his first veto. This rejected the 50-46 cleared bill ensuring that citizens who wish to access ESG investments through employer retirement plans can do so.

Some analysis indicates more than 250 anti-ESG bills have been proposed this year, in over 40 US states, but what are the potential implications from a legal perspective? I spoke with partners at Hogan Lovells, Clifford Chance, and Ropes & Gray, among others, to better understand how lawyers and their clients are navigating the increasingly complex legislative landscape in the US and the potential impact on America’s green transition.

Conflicting obligations

Steve Nickelsburg | Partner | Clifford Chance

To understand the impact of anti-ESG legislation on clients, it is important to underscore the varied legislative landscape in which corporations operate within the US. Under the federal system, both federal enforcement agencies and state attorneys general operate simultaneously and because states are not required to act in conjunction with federal enforcers, state actions are sometimes at odds with those at federal level. From an antitrust perspective, as referred to in the Republican Senators’ letter, coordinated ESG efforts equate to climate cartels, elevating the issue from a cultural debate to a potential antitrust risk.

US-based companies, especially those with a global footprint, are under international pressure to commit publicly to sustainability and emissions reduction measures from the full range of stakeholders whilst having to negotiate this highly complex, domestic legislative environment. Steve Nickelsburg, partner at Clifford Chance and member of the Global Business and Human Rights Risk team, highlights the multiple and opposing pressures clients are facing, and the reality that some are considering whether they must set up separate red and blue businesses as a way of dealing with competing demands.

But which clients are being most affected by these whipsaw public policy shifts? According to Michael Littenberg, global head of Ropes & Gray’s ESG, CSR and Business and Human Rights practice, large financial institutions and asset managers are primarily caught in the ‘ESG crossfire’ between red and blue states, with many having received subpoenas, being asked to testify, or being placed on blacklists by red states.

An obvious example of this is Florida’s $2bn divestment from Blackrock in December 2022. The financial giant embodies the polarity of the issue, being both a leader for ESG and climate change investing whilst refusing to halt investments in coal, oil, and gas, infuriating both Republican politicians and environmentalists alike.

Asset managers have a fiduciary duty requiring them to both abide by their client’s directive, and to provide the best risk-adjusted terms for the said directive. This means clients have steering control on their investment choices, and companies, such as Blackrock, are therefore obliged to offer sustainable investment opportunities for those clients wanting to go down this route, as well as traditional investment products.

We are already seeing the effects of climate change, the extreme weather that comes with it and the potential to weaken global economic growth and financial stability. This propels climate action far beyond ‘the morally correct thing to do’ to something necessitating engagement at board level as a fiduciary responsibility. As a result, complying with anti-ESG laws could be seen as going against asset managers’ core duties.

Globally, companies are becoming increasingly cautious when disclosing their ESG strategies due to regulatory efforts against ‘greenwashing’. Authorities such as the US Federal Trade Commission (FTC) are looking at environmental claims with increased scrutiny. Following the FTC’s review of the ‘Guides for the Use of Environmental Claims,’ it announced plans to update guidance, requiring, for example, more specific information to support claims of the recyclability of products. This specifically targets companies misleading customers and gaining an unfair competitive advantage in the market.

Michael Littenberg | Partner | Ropes & Gray

Nickelsburg points out the combined effect of the anti-ESG rhetoric in the US and fear of greenwashing allegations is ‘green bleaching’ or ‘green hushing’, i.e., ‘institutions putting their heads down and saying nothing’. As of June 2023, Blackrock Boss, Larry Fink claims he has stopped using the term ESG altogether. For Nickelsburg, a possible silver lining could be that greenwashing fears foster more rigor as businesses need to be able to ensure there is substance behind ESG claims.

While the politicisation of ESG appears to be strongest in the US, Adrian Walker, global Head of ESG at Hogan Lovells, cautions: ‘The backlash is a significant market development, and it has a global reach with impacts on UK and EU businesses too.’

The role of law firms

To best advise clients on ESG amid state level regulatory variations, firms must be forward-looking and keep track of both the short-term and long-term trends when it comes to ESG and climate-related regulations. Littenberg points to Ropes & Gray’s ESG legislation tracking page as a useful tool for clients to stay up to date on the ongoing developments when it comes to ESG investing at state level.

Upcoming federal requirements reveal a shift from the typically voluntary and market-led climate action we see in the US. The upcoming SEC’s climate disclosure rules are expected to come into force in autumn 2023 and will require public companies to disclose their climate impact as well as their governance, risk management and climate risk strategy. Lawyers will need not only to educate and prepare their clients on these requirements but continue to look ahead at what regulations and disclosures are in the pipeline.

Perhaps law firms with operations on ‘both sides of the pond’ are at an advantage here, being able to directly draw from the knowledge and experience of their European counterparts when preparing clients for the regulations expected to come.

Scot Anderson | Partner | Hogan Lovells

Scot Anderson, US corporate and finance partner at Hogan Lovells, emphasises the importance of ESG for any project’s

success, and the necessity of those on both sides of the issue to understand that getting a project off the ground requires community and stakeholder engagement and advocacy. Businesses that do not cover ESG in their proposals will likely experience more barriers. Anderson states: ‘Even ESG sceptics understand the soft skills required to make a project durable’. Advising in this way shifts ESG from an issue of corporate responsibility to everyday business.

Just as it makes economic sense for firms’ clients to take ESG into consideration as part of their wider business strategy, the economic growth associated with practicing ESG as a law firm cannot be ignored. Law firms creating an ESG practice could have a competitive edge against others. It is plausible that firms who respond to client demand and can provide a one-stop-shop when it comes to advice on ESG-related operational and financial risks will see increased revenue.

A bump in the road?
ESG is undoubtedly a political hot potato in the US and its polarising nature has led to some US-based organisations avoiding commenting on it altogether for fear of provoking either side of the debate. ‘Green hushing’ has also, in part, been prompted by stricter greenwashing legislation.

It’s important to recognise that the ESG backlash in the US does not exist within a vacuum. ESG and the green transition are global phenomena and therefore influence and are influenced by a variety of circumstances.

Coincidently (or perhaps not) the ‘war on ESG’ came shortly after Putin’s invasion of Ukraine which shook the global economy and caused a surge in energy prices. This presented huge financial motivation for oil and gas companies to increase production, and some were willing to undermine or entirely roll back their climate targets to prioritise this. Also unsurprisingly, fossil fuel companies are providing financial backing to anti-ESG activist groups.

According to Nickelsburg, the anti ESG agenda is ‘a counterweight in a huge discussion and is having an impact in discussions at board level.’ Significantly however, Nickelsburg points out that its potential impact will be overwhelmed by the huge subsidies and money flows in the opposite direction.

In August 2022, the US House of Representatives passed the pioneering Inflation Reduction Act (IRA) expected to spur a tsunami of capital into clean energy and climate change investments – approximately $3 trillion – through the expansion and extension of tax credits. This will be a key driver of the green transition in the US, providing a powerful financial incentive for a private sector to move away from carbon intensive infrastructure. As suggested by Nickelsburg, it is highly unlikely that the backlash will derail this industry shift.

In addition to the major economic impetus from the IRA, reporting directives show no signs of slowing in Europe (especially the EU). The enhanced climate disclosures set by the EU due January 2024 require businesses to disclose their indirect or ‘Scope 3’ emissions. These requirements therefore call on US-based companies embedded in EU supply chains to accurately report on their own climate impact, and in turn pressure them to take meaningful actions to reduce this.

Anderson states, ‘ESG is too deeply embedded for the backlash to truly hinder it’, and according to Littenberg: ‘US companies strive to be global leaders, or at least remain globally competitive. This requires them to embrace innovation and be part of the green transition’. Law firms in turn will need to keep a close eye on state and federal-level ESG legislation and be forward-looking in terms of their own commitments to help clients navigate the politics of ESG and stay competitive as a firm.

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Demanding trust from carbon offsets: why the legal sector must diligently interact with the Voluntary Carbon Market to support global decarbonisation

Investigations by the Guardian and SourceMaterial brought damning and destabilising indictments of the carbon offset market; harnessing academic conclusions, the reports echoed that leading certifier Verra has approved carbon credits which either do not match the carbon claimed to be reduced or removed from the atmosphere, or which have no genuine carbon reduction.

The legal sector must face this challenge as both advisors to offset projects and corporate carbon-credit purchasers, and as credit consumers themselves. In client work and internal strategies, law firms lean heavily on the carbon credits issued from climate mitigation projects to make significant claims of ‘carbon neutrality’, declared where credit purchases help finance a mitigation project which can offset carbon corresponding to the buyers’ operational emissions. Similarly, providing advice for carbon reduction and removal projects on the issuance of credits is an increasingly fertile area of client work for firms.

Accordingly, the legal sector has an inherent interest in rebuilding trust – waning amid popular scrutiny of the veracity of carbon credits – following its advocacy of carbon credits, both to reassure the validity of the corporate carbon-neutral strategies on which it advises and to ensure that nature-based climate solutions actually pursue an environmental good.

Carbon credits and the VCM

At its fundamental level, a carbon credit is marketed as an option for a purchaser to effectively offset 1 ton of CO2 that it emits, in that the purchase of a credit purportedly finances the management of an environmental or technological solution that correspondingly reduces or removes the equivalent CO2 from the atmosphere.

Private actors purchase carbon offsets from climate mitigation projects on the Voluntary Carbon Market (VCM). As a non-regulated decision for voluntary actors, the credits do not count toward complying with legally binding emissions compliance objectives.

We are at a juncture where criticisms of carbon credits cannot be ignored; the VCM cannot be left to continue issuing spurious credits which do not correspond to the carbon which projects actually mitigate, since such would only mask and perpetuate our current, unsustainable global emissions levels.

However, neither should commentators simply condemn – and encourage the abandonment of – the offset market, since there are fundamental risks which would emerge amid the VCM’s failure. When considering emissions removal projects, where carbon financing incentivises the protection of natural carbon sinks and supports communities to develop in harmony with their local environment, the withdrawal of said financing may leave the area vulnerable to resurgent deforestation or natural destruction, particularly in emerging markets with insufficient protections for sustainable land use.

At this point, the emissions supposedly ‘offset’ would be returned to the atmosphere and the VCM would have served only as an exercise to perpetuate greenhouse gas emissions among credit purchasers. With the development of climate litigation concerning false sustainability claims, the VCM must guard against the risk of greenwashing inherent in this scenario and strengthen its standards and verification processes.

Despite – yet also because of – my scepticism toward the current transparency and quality of the VCM, the potential pathway that appears most feasible and most productive to me in fact requires greater, albeit more scrutinised, participation. If the UN’s target of a 45% carbon reduction by 2030 is to be met – and acknowledging that carbon credits are an engrained method of driving corporations to financially contribute to decarbonisation – the carbon market must credibly ensure that corporate finance maximises its environmental impact.

Internally, law firms are already making important steps to acknowledge that, where their carbon emissions are to be offset, credits should be verified and be sourced from projects which provide quantifiable evidence that carbon finance is making a material impact. Linklaters, for instance, from 2019-2022 purchased carbon credits from the Gola Rainforest Protection Project, taking value from the project’s REDD+ verification, the scrutiny the project received from the RSPB, and the fact that the co-benefits – here the capacity-building of local farmers – provide a local economic variable that could be monitored.

However, the legal sector has a key role not just as a purchaser of carbon credits, but also as counsel within ESG strategies, as representation of reduction and removal projects, and as advisors on the development and implementation of informal regulatory frameworks. Within these arenas, the legal sector must fulfil important work that helps strengthen and scale-up the VCM, reassure carbon credit demand, and provide more stable funding to ensure that valuable projects remain operational.

Reforming the VCM

Seeking to create the conditions and confidence necessary to build scale within the VCM, the Integrity Council for the Voluntary Carbon Market has developed its Core Carbon Principles (CCPs), which, I would argue, must underpin the legal sector’s activity regarding the VCM. My support for the CCPs comes from the fact that I perceive them to be the most feasible near-term method of reforming the VCM to help it pursue good outcomes within corporate-side decarbonisation and community-side environmental protection.

The CCPs released in late March 2023 provided guidance on how – at the level of carbon-crediting programmes like Verra’s Verified Carbon Standard, which issue the credits corresponding to the carbon offset by a mitigation project – the VCM can align itself to a threshold of quality and integrity, and accordingly build the trust in the market necessary to grow at scale. Here, I focus on four key aspects: how the principles help create uniform standards, reassure the veracity of the link between finance and carbon mitigation, provide focus on the types of projects suitable for carbon finance, and offer a potential avenue for interaction with international climate frameworks.

Seeking to build stakeholder understanding of project strategies, credit origins and quantification, environmental and social impacts, and the veracity of the mitigation activity, prior best practices have been consolidated into principles on effective governance, credit tracking, transparency, and robust third-party validation and verification. These principles help create coherent, uniform standards that help provide lawyers a sense of predictability in legal work – whether as purchasers of carbon credits, advisors on corporate ESG strategies, or as counsel for offset projects themselves – and aid in building certainty on the environmental and emissions impact of carbon-mitigation projects.

Potentially focusing the types of mitigation activities lawyers will advise on in relation to obtaining carbon finance, the Robust Quantification principle requires emission reductions and removals to be verified ex-post, following the mitigation activity. By preventing the ex-ante issuance of carbon credits by projects, quantified before the emission reduction or removal, the CCPs may consequentially adapt the profile of clients seeking carbon finance; with emerging technologies which require an injection of finance before reducing or removing carbon seemingly ineligible for CCP-labelled carbon finance, lawyers may increasingly be providing advice to those existing projects whose issued credits reflect an already-realised mitigation impact. While limiting the scope of carbon finance, such will help assuage accountability concerns that certain projects overestimate their environmental impact in order to issue more carbon credits and secure extra finance.

Importantly, the principle of Sustainable Development Benefits and Safeguards – stressing that carbon-offset programmes must meet best practices on social and environmental safeguards while delivering positive sustainable development impacts – may present a significant opportunity for legal interpretation. That the principle stresses adherence to the UN Sustainable Development Goals suggests that carbon finance is refocusing to become a tool wherein corporates and individuals support predominantly nature-based carbon reduction and removal strategies to boost the resilience of communities disproportionately vulnerable to climate change. Accordingly, the impact will perhaps be that the focus of legal work shifts further toward community-level, nature-based carbon-mitigation solutions, wherein lawyers active on advising projects may be forced to expand their understanding of environmental and social risk, sustainable management, and human and community rights.

Pertinently, the CCPs include an additional attribute of “Host country authorisation pursuant to Article 6 of the Paris Agreement”. The attribute therefore established a relationship whereby a carbon credit authorised by the host country for trading toward the attainment of another country’s Nationally Determined Contributions (NDCs) can instead be traded on the VCM as a high-quality, internationally recognised credit for corporate purchasers. With the interaction between the VCM and Article 6 currently untested, the legal sector will face vital work in reassuring a complementary role for the VCM that does not impinge upon compliance markets and host countries’ NDCs, utilising the standardisation the CCPs provide to interact efficiently amid the international cooperation, rulemaking, and scrutiny established within Article 6.

Article 6

Article 6 established a mechanism whereby host states can authorise emissions reductions and removals to be transferred by the host country to another party as an ‘internationally transferred mitigation outcome’, contributing toward the recipient’s Nationally Determined Contribution (NDC).

 

Reconceptualising the VCM

Earlier, I posed that the VCM requires greater participation to build the integrity and confidence necessary to provide a dramatic increase in the scale of carbon finance. My argument here follows three assumptions: the current price of carbon offsets (currently averaging below $5 per credit) incentivises corporates to purchase cheap credits toward making ‘carbon neutral’ claims, rather than committing more strongly to wholesale decarbonisation; a lack of sufficient checks on mitigation projects creates an uneven glut of low- or no-impact mitigation projects; and these factors combined prevent funding from being filtered toward projects with the greatest climate impact.

Accordingly, I would argue the VCM requires an increase in participation that, at a basic level, drives up the price of credits, consequentially pushing down the relative cost of decarbonisation initiatives while focusing carbon finance toward high-impact projects.

Yet no change in participation is forthcoming while the VCM faces legitimate doubts on the quality and credibility of its credits, both regarding their transparency and their emissions impact. Should such doubts be assuaged, market demand could consequently increase, boosting credit prices and thereby augmenting the finance available for climate action.

With law firms finding it increasingly important – for client outreach, staff engagement, and their sustainability strategies – to make a positive contribution to the green transition, especially boutique firms who may lack the capacity to commit extensive hours and finance to climate action beyond their client work would benefit, should stronger best practices provide confidence that carbon finance can help support authentic emissions reduction and removal projects. Accordingly, such may help manage the concerns of Norwegian boutique firm Glittertind, which commented that, presently, the lack of sufficient information on the mitigation impact and social consequences of offset projects creates uncertainties surrounding the purchase of carbon credits.

The first release of the CCPs is an important development in the VCM which will help consolidate existing disparate standards and provide a necessary sense of uniformity, helping clarify legal work while providing simplifying processes for buyers. Additionally, the CCPs go some way to focus carbon finance on accountable, transparent projects which help local communities protect their native environments while delivering on global carbon mitigation; here, should the upcoming release of the category-level CCPs provide further confidence on the quality and character of high-quality carbon credits, there could emerge an exciting future role for the VCM as a supplementary tool within global decarbonisation.

By familiarising itself with these emerging standards and contributing to the dialogue on their development, imbuing the CCPs into internal strategies when purchasing carbon credits within law firms, and remaining cognisant of the best-available guidance during client work for projects and corporate clients, the legal sector must play a vital role in facilitating the development of a high-integrity VCM.

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Navigating Post-Brexit Environmental Legislation in the UK: Challenges and Opportunities

The EU is internationally recognised as a leader in sustainability, having enacted a number of laws and policies aimed at promoting a green transition and sustainable development. The UK has historically been bound by EU environmental law and has largely adopted the same approaches. However, since Brexit, the UK has been free to develop its own environmental policy – something the country has been doing over the past several years.

This change has brought a number of challenges and has been a topic of hot debate among experts. In order to better understand this discourse, I spoke to Professor Robert Lee and Simon Boyle, renowned experts in this field. Lee is a Professor of Law at the University of Birmingham, who has acted as a specialist adviser to various international agencies including the European Parliament, European Commission, UNEP and UNDP. Boyle, Environmental Law Director at consultancy Argyll Environmental, has 25 years’ experience as an environmental lawyer which has included working in local government and for a major manufacturing company.

Discussing the main challenges that Brexit brings to the UK regarding environmental protection from a legal perspective, three main consequences stood out: devolution, lack of enforcement, and loss of data – each of which come with their own obstacles.

Devolution

To fully understand the effects of Brexit on environmental legislation in the UK, it is important to acknowledge that the region is formed by four very different nations, each with distinct priorities and legal decisions made based on those priorities.

Simon Boyle| Legal Director | Argyll Environmental

When the UK was legally bound by EU law, this brought a number of advantages, a clear one being uniformity: EU law kept legislation the same across the UK. Now, the glue that held everything together has gone – Wales, Scotland, Northern Ireland, and England are all using different approaches to tackle their environmental policies. As Professor Lee comments: ‘The days when we had a united UK environmental legal regime are pretty much gone.’

EU directives required all regions of the UK to adhere to minimum legal standards, resulting in a consistent framework of environmental laws across the nation. However, in the absence of a unified instrument like a directive, different governments may now take separate paths, leading to potential divergence in environmental legislation.

Take as a case study the UK’s approach to agricultural policy: After Brexit, each nation developed different agriculture provisions and different legislative measures. For instance, in England, there will be money allocated for farming biodiversity from 2024 onwards; meanwhile, we don’t see this for the other three nations. The issue here is clear: Will certain regions fall behind because of a lack of uniformity?

Losing the uniformity we got from following EU legislation will mean replacing it with an untested approach from the Westminster government. This raises important questions for regions such as Wales, which has a considerably lower GDP than England: Would this mean that Wales gets less funding? How would negotiations on the topic between Westminster and the devolved parliaments go? Administrations and governments can only operate within their financial constraints, so a lack of funding could pose a significant issue.

Enforcement

Under the EU, environmental enforcement matters were supervised by the European Commission. Now, in England, this has been replaced by the Environment Agency. Going back to the point above, each of the UK’s four nations have their own approach to enforcement, and the remaining three countries are still working towards solutions, having no formal legislative mechanism.

Professor Robert Lee | Professor of Law | University of Birmingham

Will the new enforcement system in England have the same level of scrutiny and oversight as the European Commission? This is something that should become clearer over time. Presently, according to Boyle, polluters are allowed to get away with too many illegal breaches. An example is the lack of action by the Environment Agency when it comes to water pollution, which has resulted in not a single river in the UK being in good environmental health. In England alone, there are over 800 illegal discharges of waste to water a day, and the vast majority of those are going unenforced.

In Boyle’s opinion: ‘The UK needs a strong regulation system that achieves something, and where people are held accountable. However, that has been lacking.’ It’s evident the UK needs to focus more attention on enforcement. After all, no amount or quality of legislation will be enough if there isn’t an effective enforcement system.

Data

Another big issue raised by both Boyle and Professor Lee is data. The EU Environment Agency (not to be confused with the UK Environment Agency) collects a significant amount of data every year, providing a clear picture of the environmental situation at hand, which in turn helps governments discern which environmental policies are working and which ones aren’t. This information is extremely useful when it comes to developing new environmental legislation.

While the UK can still access public data relating to this, it no longer has governmental access to it. For example, chemicals and chemical pollution matters are dealt with under two main provisions in EU law, and since 2008 EU member countries have been forced to register chemicals circulating in the market (under the REACH regulation). Those data sheets contain valuable information, which the UK can no longer access.

Similarly, the European Atomic Energy Community (EURATOM) Treaty established a single market for the trade in nuclear materials and technology – after Brexit, the UK is no longer a part of it, and as a result has lost access to important data on nuclear testing facilities as well as nuclear scientific collaborations.

Data is also important when it comes to environmental permitting, which is based on best available technique reference documents or BREF notes in the EU (these set out how to prevent or control pollution and other adverse environmental impacts originating from a number of activities). Again, the UK will have access to public information on this, but it no longer sits at the table which determines what the best techniques for industrial processes are, and it is no longer a part of the data generation exercise.

There are certain areas, such as biodiversity, where both the EU and UK currently lack data: This is a key issue which needs to be solved soon, and one which the UK could take the lead on.

More obstacles

In addition to a lack of uniformity across governments, a lack of data, and a lack of enforcement, another issue that could get in the way of the UK developing effective environmental policy is a lack of resources. As Professor Lee states, ‘How much we can achieve will depend on how ambitious each one of the four governments in the UK are, and also on how much resources they have.’

In Boyle’s opinion, too often, the UK government puts policies in place which aren’t ambitious enough. As he puts it, ‘It is time to make it clear, we can’t carry on like this.’ It is essential that we have individuals in the government who understand the importance of uniformity, resources, enforcement and data gathering, and are willing to push for a change, matching their words with actions.

Yet another key point to consider is that of sustainable development: balancing social, environmental, and economic concerns. Boyle comments: ‘We need to focus a bit less on economic growth, and a bit more on sustainable development.’ Whilst there are important economic issues to consider, prioritising environmental protection over short-term economic growth would be beneficial for everyone – including from an economic perspective – in the long term.

An opportunity?

Both Boyle and Professor Lee agree that at first glance Brexit is not beneficial for environmental legislation and protection in the UK for multiple reasons. However, we should be thinking about how we can benefit from it. While Brexit undoubtedly brings many challenges, the UK could potentially use Brexit as a means to create even better environmental legislation and therefore ensure even better protection than the EU.

Having different devolved governments implement their own environmental laws may not always be negative. In fact, certain nations could be more progressive than others, taking a stronger approach than even the EU, and serving as an example for other countries to follow.

When it comes to environmental protection, climate change issues, biodiversity and water pollution are all tightly interconnected, affect each other and can’t be separated. If the UK takes this into consideration, Brexit could also be used as an opportunity to take a more holistic and consolidated approach to environmental legislation compared to the EU.

With growing pressure from the general public, other governments, and not least natural disasters and the consequences of climate catastrophes around the world, the UK now has the chance to develop strong, meaningful and informed environmental legislation and get ahead in this area. Bearing in mind that EU law grew and developed over decades, it is however clear that the UK will need ambition, political will and sufficient allocated resources to do so.

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The Devil Wears (Sustainable) Prada – all eyes on fashion’s sustainability claims

When the worst offenders for climate change are trotted out, the usual suspects from the worlds of oil, gas and mining are generally front and centre. However, while fashion’s green credentials have for some time flown under the radar, scrutiny of the sector is now on the rise. 

The fashion industry is responsible for roughly 10% of annual global carbon emissions, more than all international flights and shipping combined, and major brands are now facing more pressure than ever to make good on their eco-friendly claims. 

Some retailers have already begun their moves towards sustainability, with H&M’s Green Machine utilising technology to recycle blend textiles, and Patagonia’s founder Yvon Chouinard giving the company away to a charitable trust which will reinvest the company’s profits into fighting climate change; the company already has a notable standing in the sustainable space thanks to its previous eco-friendly practices such as offering lower-cost clothing repairs and its ‘Don’t Buy This Jacket’ advertising campaign, encouraging consumers to only purchase what they need. 

However, while the actions of some have garnered praise, the words of others have come under increasing scrutiny, and the misleading marketing of supposedly “sustainable clothing” is firmly in the firing line of regulators. 

New season, new rules 

‘The Competition and Markets Authority (CMA) has put the fashion industry front of the queue when it comes to investigations and enforcement activities’, comments Geraint Lloyd-Taylor, a partner in Lewis Silkin’s advertising and marketing practice. ‘Consumers and fashion companies are focusing on sustainability, but it is difficult to sort the truth from the puffery and to ensure consumers are not being misled, so the UK’s CMA has made fashion a top priority’. 

Geraint-Lloyd-Taylor | Partner, advertising and marketing practice | Lewis Silkin

In that vein, the CMA announced in July 2022 that it would be launching an investigation into claims made by ASOS, Boohoo and George at Asda about their “sustainable” fashion products. Lloyd-Taylor comments: ‘It is important to not assume these companies have done anything wrong – the investigation is at a very early stage. Nevertheless, the fact the CMA has named these companies and announced its investigation will be very unwelcome for those involved’. 

In September 2021 the CMA set out a six-point ‘Green Claims Code’ to provide guidance for business and consumers on avoiding misleading green claims, and Lloyd-Taylor also adds that further challenges may be on the horizon: ‘The CMA has set a very high bar with the Green Claims Code, but it is yet to be seen whether a court would share its interpretation of many of these concepts and ideas’. 

However, Stephen Sidkin, head of the fashion law group at Fox Williams, questions how long these issues will be under the purview of the CMA: ‘The legislation currently influencing the future of fashion’s sustainability has to be the relatively old Consumer Protection from Unfair Trading Regulations (CPUT), which underpins the CMA’s Green Claims Code. In cases such as those facing ASOS, Boohoo and Asda, I anticipate that over time, encouragement will be given by the CMA for actions concerning CPUT to be taken by individuals rather than the CMA. In one sense, this can be regarded as the privatisation of the enforcement of consumer law’. 

International trend-setters 

Further afield than the UK, Bird & Bird’s Constantin Eikel and Ariane Le Strat – counsel and senior associate in the firm’s Düsseldorf and London offices respectively – highlight the international challenges: ‘Globally, international fashion companies often aim to have consistent promotions across many markets. This raises the challenge of finding common legal ground on the lawfulness of sustainability claims throughout the EU, the UK and beyond’. 

Constantin Eikel | Trade mark law counsel | Bird & Bird

As Eikel explains: ‘The rules of sustainability have not been harmonised across the EU. Claims allowed in one country could be seen as an infringement in another. Similarly, the laws on green advertising are in rapid development and the rules are tightening. Companies need to keep up with recent developments and scan the horizon to futureproof upcoming marketing campaigns’.  

Efforts to level the playing field across the EU are on the horizon though, as Eikel comments; ‘The harmonisation efforts of the EU regarding green advertising (e.g. the Proposal for a Directive on empowering consumers for the green transition) should help to find common ground and make compliance more achievable’. 

He continues; ‘The proposal sets a very high bar for so-called “generic environmental claims” such as “environmentally friendly”, “eco-friendly”, “carbon neutral” and many more. Advertising with such generic claims will be prohibited unless brands can provide evidence of “excellent environmental performance”, defined as compliance with an officially recognised ecolabelling scheme’. 

Stephen Sidkin | Head of fashion law | Fox Williams

The legality of claims around sustainability are being challenged in other regions as well. The US Federal Trade Commission is increasingly focused on sustainability claims in the fashion sector and several states are proactively introducing legislation regarding sustainability requirements for large fashion companies; a key example is the proposed New York Fashion Sustainability Act. 

And while much of the focus is currently on fast fashion brands, luxury fashion houses are also a key part of the puzzle.  

As Sidkin comments; ‘Generally, luxury brand consumers are older than those who purchase fast fashion, and what is important to one demographic group is not necessarily important to the other and vice versa. As a result, fast fashion brands are likely to have to develop lower cost alternatives to the actions taken by their luxury cousins’. 

Lloyd-Taylor adds, ‘It’s also important to keep in mind that where high-end fashion leads, the rest of the market tends to follow. So luxury brands can keep flying the flag and showing that sustainability is at the top of their agenda, and this should have a trickle-down effect on the whole fashion sector’. 

The new look for GCs 

When it comes to the ways in which general counsel can steer the ship towards a sustainable future, Lloyd-Taylor suggests that every stage of the product lifecycle holds possibilities; ‘There is so much that GCs can do, including encouraging the business to consider sustainability at an early stage during supplier negotiations. Contracts could include basic targets or more complex sustainability-related KPIs. The next step will be to consider how best to manage performance and monitor compliance’. 

Ariane Le Strat | Competition and EU law senior associate | Bird & Bird

‘It is also vital that suppliers provide accurate information so brands can rely on it as a foundation for their own environmental claims. GCs can introduce tough options, termination provisions, warranties and indemnities when those requirements are not met, even if they may have previously been considered relatively trivial obligations’. 

Lloyd-Taylor also adds that looking backwards may help with the path forward; ‘GCs can help the business think more creatively about whether longstanding practices, which might have been introduced to offer consumers greater convenience, might be contributing to its inability to meet sustainability goals’. 

For Eikel and Le Strat, awareness is key; ‘GCs should aim to be as informed about changes to national law as possible until a more harmonised approach can be found. While the somewhat fractured legal landscape on green advertising may seem daunting at first, there are many common themes including the ability to substantiate claims made and to stick to precise languages, avoiding vague terms, and only advertising within the common ground’.