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A new initiative for the legal sector, Lawyers for Net Zero, was launched in July and aims to support in-house counsel in delivering climate action in their organisation. In-House Perspective examines what in-house lawyers could and should be doing in this area.

In mid-July, Lawyers for Net Zero was launched to support in-house counsel in delivering climate action in their organisation. The initiative has already recruited more than 50 in-house counsel as Lawyers for Net Zero champions, from organisations such as GSK, Nestle, Drax, Cambridge University Press, BetVictor, Arup, Deutsche Bank, Birmingham Airport and E.ON – and more are joining weekly.

Its launch follows a pilot phase featuring 20 in-house lawyers from businesses spanning a variety of sectors, which aimed to develop key principles for counsel to follow in ensuring their organisations meet the climate challenge and deliver on their pledges.

The initiative is the brainchild of Adam Woodhall, Lawyers for Net Zero’s Executive Director, who, after 15 years of experience delivering climate action in large organisations, recognised there are a number of professionals who can influence their organisation to speed up climate action.

‘After some research in 2020, I realised the legal sector didn’t have many initiatives focused on it,’ he says. ‘Crucially there are no initiatives dedicated to empowering in-house counsel in this field, so we started piloting the programme in spring 2021, and then launched this summer.’

Lawyers for Net Zero’s aim is for in-house lawyers to use their position and influence to help their organisation achieve legitimate Net Zero – reached when the amount of carbon dioxide an organisation adds is no more than the amount taken away – as quickly as possible.

Counsel have a crucial role at the centre of their organisation, says Woodhall. ‘They can use both their position as a legal expert and as a trusted business advisor to both champion […] Net Zero and to deliver rapid practical action, by for example inserting environmentally friendly clauses into contracts.’

They’re often seen as a moral compass located at the centre of their organisation, he adds, so they are ideally placed to help navigate this journey, particularly in guarding against ‘greenwash’ – where an organisation misleads the public about its green credentials.

A pressing case

Given that fighting against climate change is a collective effort, it helps for organisations to get involved in industry-wide associations and campaigns that allow businesses to collaborate and share best practice, says Maria Connolly, a partner at TLT in the UK and the firm’s executive board member responsible for sustainability.

‘In doing so, an organisation could actively lead the sustainability charge in its sector. In the legal industry, collectives such The Chancery Lane Project, the CBI and the Legal Sustainability Alliance are playing a vital role in spurring on progress,’ she says.

It’s vitally important for businesses to tackle climate change.

Drastic action is required to limit the global average temperature increase to 1.5°C (or well below 2°C) above pre-industrial levels, as stipulated by the Paris Agreement, the treaty on climate change agreed by 195 countries in 2016.

Given that the world’s eight biggest supply chains – food, construction, fashion, consumer goods, electronics, automotive, professional services and freight – are accountable for more than half of global annual emissions, according to a World Economic Forum report published early this year, business has a big part to play in achieving this target.

Climate does indeed affect each area of business, says Abhijit Mukhopadhyay, Secretary of the IBA Corporate Counsel Forum and President (Legal) and General Counsel at London-headquartered Indian conglomerate the Hinduja Group.

Recent events – floods, heatwaves and wildfires – bear testimony to how the climate is changing. But organisations can contribute significantly in the fight to combat the climate crisis.

Mukhopadhyay believes most organisations are ‘very high on sound and noise but low on content.’ However, he notes that the US has reengaged on the climate from a diplomatic perspective and is supporting action on climate change globally, and hopes that things will change. ‘The same we can say about China and India who are actively supporting [efforts to prevent] climate change.’

Imperatives for action

Society, stakeholders and employees will increasingly expect organisations to demonstrate the actions they are taking to address the global climate crisis, says Catie Sheret, General Counsel and Company Secretary, Cambridge University Press and a Lawyers for Net Zero Champion.

Legislation is gradually catching up with this trend and the ethical imperative will, therefore, increasingly become a legal one.

Indeed, public opinion may be a key driver in pushing action on the climate crisis up the corporate agenda. In the UK for example, a recent YouGov poll showed that 67 per cent of the British public want to see the UK as a world leader on climate change, and 65 per cent want to see the UK government shifting the subsidies it currently provides to domestic oil and gas companies to instead support the expansion of renewable energy and to increasing the energy efficiency of people’s homes.

There are many drivers for organisations to have a climate change agenda, says Nick Smee, a senior associate at Browne Jacobson. ‘Many organisations face regulatory change in the near future; key stakeholders, including customers and employees, are demanding organisations to take a stance and to act; it also affects the bottom line, with major corporates requiring their supply chains to align on this agenda and consumer demand shifting.’

Numerous reports also list improvements in public health, reduced healthcare costs, greater energy security, growth in the low-carbon jobs market and a reduction in poverty and inequality as key benefits resulting from climate change mitigation.

Why have a strategy on climate – and how to build one

A climate change strategy enables the organisation to understand their own impact and how they can make changes to contribute to solving the climate emergency, Sheret says. ‘A strategy can help to prioritise activities according to the individual organisation, as impacts are so sector-specific, as well as providing the basis on which to embed behavioural change internally, as well as throughout the supply chain.’  

A climate change agenda is also important given the developing body of litigation against companies which do not have a strategy in place or whose action in this area is not deemed to be appropriate. For example, in May, the Hague District Court handed down a notable judgment when it found that Royal Dutch Shell had breached its duty of care resulting from human rights obligations by its contribution to global greenhouse gas emissions. Shell, in a statement to the IBA’s publication Global Insight in July, said it was considering whether to appeal.

‘It is fair to say, based on experience, that this decision will likely be the grounds of claims against other similar companies to Shell, using it as precedent,’ says Sylvie Gallage-Alwis, a partner at Signature Litigation, Paris.

To create a policy designed to combat the climate crisis, businesses should start at the beginning, look at what they are able to control and gather the data to make informed decisions, says Sheret. ‘Don’t try to tackle all areas at once but maybe pick three or four at a time to focus on; and use a tool or system that helps give you direction, such as science-based targets under the Greenhouse Gas Protocol’, she says, referring to the global standard assisting companies in measuring their greenhouse gas (GHG) emissions.

Grass roots engagement should be encouraged so the strategy reflects centrally directed activities and investments, as well as initiatives from across all levels of the organisation that enable everyone to see how they can contribute, says Sheret. ‘But most importantly have a team that can help support and work on initiatives, whether it be volunteers or as part of their role to help drive the change. Give employees permission to carve out time to get involved,’ she adds.

Organisations should first check what regulations apply to their sector and whether there already exists a legal requirement to have a plan on climate change, and then proceed step by step, says Gallage-Alwis.

It’s important for companies to check the impact their current activities have before deciding which measures can be implemented and what the impact would be of each of them, she says. ‘Before getting subsidiaries and subcontractors to participate in the plan, [companies] should check the feasibility of such extensions short-term, and the investments needed for a long-term change. Finally, [companies] should publish only what is necessary and supported by data that can be shared if need be.’

These steps are important as improper, incorrect or unrealistic plans can cause financial and reputational damage, explains Gallage-Alwis.

Indeed, so-called ‘greenwashing’ claims have become increasingly popular. Such claims involve claimants bringing a case against an organisation who they allege has not been truthful in describing their impact on the environment.

On a related note, in the US the country’s Securities and Exchange Commission announced in June that it would be looking at companies’ climate change-related disclosures.

Driving change

While we all have our part to play on big ticket issues such as this, change is often driven from the top and purpose-led behaviours from the C-suite are key to this, says Chris Bowden, Managing Director of clean energy supplier, Squeaky.

Bowden says it’s these individuals – specifically the CEO – who can raise the ambition of a company’s employees, reflect honestly on the challenges and shortfalls and set a definition of responsible leadership. ‘These purpose-led behaviours will then trickle down through middle management. After all, these are not only the people who split budget, develop products, and lead teams, but they are also our future leaders who will carry this weight of responsibility far beyond our days,’ he says.

There are many ways in which an organisation can push forward an agenda aimed at combatting the climate emergency. These can include by improving manufacturing processes to using less energy. ‘One good example is that there are many companies who have plans to produce electric vehicles, forcing changes in the E-vehicle market in the next one decade or so’, says Mukhopadhyay. ‘Every global organisation should adopt their climate policy and should work closely with their respective national governments and global bodies.’

Organisations themselves are not the ones that make change, it is the people within an organisation that do this, says Kim Alcantara, Director of Legal, BetVictor and Lawyers for Net Zero champion. ‘The most important thing any person can do is simply to raise to awareness and keep asking for change. Ask the company you work for, “what is our carbon footprint and what are we doing to reduce it?”.’

This, she says, is something that everyone can do regardless of their role or seniority within an organisation. ‘For those who are in a position to do so, sustainability and the environment should be made a regular agenda item for board discussions to ensure it is being addressed at the highest levels of an organisation. The first step to net zero is to measure where you are now. We cannot move forward until we know where we are starting from.’ 

A review of internal operations and its business plan can help a company proactively embed climate change into the way they operate at every stage. Angus McGuire, in-house lawyer at Glasgow Spacetech company Spelfie, says these could involve a wide range of issues, from considering how staff travel to work, what recycling the company carries out, the green credentials of suppliers/customers and reduction of energy use within the office.

‘Not so long ago putting a footer on an email asking the receiver to consider the environment before printing was often seen as enough for many organisations to tick the environmental box. This is no longer sufficient and organisations must be much more proactive,’ he adds.

Technology can undoubtedly play a major part in meeting net zero emissions targets in a feasible and cost-effective fashion. The UK’s Climate Change Committee – an independent non-departmental public body – has cited carbon capture, usage and storage; the use of hydrogen; and electric batteries as technologies that could play a key role in the future.

Carbon emitting technologies need to be replaced by newer alternatives – as we’re seeing everywhere from heating and transportation to catering equipment. Smart technologies that capture data will also be needed, says Connolly at TLT.

‘As well as switching to a renewable energy supplier, smart meters and other emission-reading tools can provide the data needed to make informed decisions about sustainability. And by continuously measuring energy use, for example, organisations can understand usage trends and where they could make savings, reaping both financial and environmental benefits,' she adds.

Getting buy-in

To get buy-in from management to take forward their agendas on combatting climate change, in-house lawyers should focus on the benefits of why this is so critical. ‘Aside from the obvious ones (having a liveable planet for generations to come!), it just makes good commercial sense to make sustainability a strategic priority,’ says Alcantara. ‘If organisations can get ahead of mandatory requirements (which will be inevitable) then there will be a huge financial and reputational benefits.’

An in-house lawyer’s role is to set the tone in terms of governance and these days, good governance can only be achieved if it includes the environment, she says. ‘In-house lawyers need to advise management that to properly discharge their duties, the climate change agenda must be front and centre.’

The risks to all organisations of not addressing this are huge: financial penalties, blacklisting by suppliers, reduced employee retention rates, loss of customers. ‘And that isn’t even including the risk of the destructive damage which climate change will cause,’ adds Alcantara. Businesses in Germany witnessed this first-hand in July, as floods caused severe damage in areas such as the Ruhr region.

Getting buy-in from staff as a whole will also be important. Alcantara recommends making staff feel part of the solution. ‘ESG agendas will not work without the backing of employees so make sure you take them on the journey with you,’ she says. ‘In-house lawyers are often close to the decision makers so try to get the go-ahead to share those decisions across all levels of the organisation. Most companies are unlikely to have a sustainability expert so ask for volunteers when you are collecting data. You will be surprised by how willing and able many people are to take part.’ 

Leading the way

Sweden and the UK are leading the way in the global climate change rankings, according to the 2020 Climate Change Performance Index (CCPI), which tracks the climate mitigation efforts of 57 countries and regions as well as the EU as a bloc.

However, no country or region is performing well enough in all categories to achieve a score that’s good enough to place them in one of the top three spots in the index. Those top spots are all reserved for countries doing what’s needed to keep the rise in global temperature below two degrees Celsius, and as a result, they’re currently empty. More must clearly be done.