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.

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.

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.

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.

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

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.

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, 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.

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.

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.