The climate change challenge

It is a universal truth that climate change affects all of us, wherever we are and in all walks of life. 

Lawyers and law firms are no different in this. When asked in a survey by the Dutch Association of In-house Counsel and the Dutch law firm Houthoff, nearly 50 per cent of the in-house legal teams agreed that they faced climate change-related risks – and only about 15 per cent felt that their legal teams were well equipped to address these risks. 

According to the Grantham Research Institute on climate change and the environment at the London School of Economics (LSE), there are currently around 1,900 climate laws and more than 380 climate-related litigation cases from 29 countries across the world. There are 13 such laws and 64 climate-related cases in the UK. 

The earlier cases often dealt with aspects of planning decisions, for instance in City of Bradford Metropolitan Council v Feather (Planning Inspector Decision 1995). More recently, many cases in the UK focus on government policies – or the lack thereof – for example, in the pending case of Vince v Secretary of State for Business, Energy and Industrial Strategy relating to the reduction of greenhouse gas emissions and national climate strategy. 

However, it would be wrong to think that climate change is only relevant to large organisations addressing issues pertaining to national or even international policy. Climate change affects every company and likewise, firms of all types and sizes need to respond to that challenge. 

As solicitors, particularly transactional lawyers, we are often asked to advise clients on a specific aspect of a transaction or contract. But wider opportunities to discuss risks affecting a particular sector or client will still arise, whether that is in relation to a specific transaction, for instance, climate-related risks for a particular project or supply chain; the climate change impact on planning consent; or in more general advisory work (eg in relation to directors duties). 

On a practical level, the Chancery Lane project offers assistance in this regard. This is a joint project of lawyers from a range of different law firms, chambers and other types of firms active in relevant fields. It has recently presented its Climate Contract Playbook and Green Paper of Model Laws which contains 16 precedent clauses to assist lawyers and businesses to work towards climate targets. The project also proposes seven model laws to accelerate the transition to net '¨zero emissions. 

The model clauses cover a wide range of topics such as climate purposed confidentiality terms to encourage the parties to discuss the climate change and environmental impact of a new project at '¨the outset of a new commercial relationship. 

Other clauses include, for instance, a climate change due diligence questionnaire; a climate contract risk sharing mechanism for supply contracts to ensure contracting parties work together '¨to balance financial risks '¨and avoid unintended adverse environmental and social issues; and a clause to allow termination of a supply '¨contract to substitute an existing supplier in favour of a more environmentally friendly supplier. 

Climate change is an emerging area of law that has practical consequences, not only in relation to renewable energy projects and emissions trading and reporting, but will, as not least demonstrated by the Chancery Lane project, also directly or indirectly have an impact on matters such as planning, public procurement, company law and commercial property. 

As such, this will require lawyers from all specialisms and different types of firms to consider practical solutions. Let’s get stuck in – have you discussed climate change with your clients?  

Silke Goldberg is a partner at Herbert Smith Freehills herbertsmithfreehills.com

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