In 2024, the UK’s legal sector continued to navigate evolving climate change, sustainability, and ESG challenges, and despite the absence of specific UK ESG regulations, various pieces of legislation in the UK and the EU have a significant impact.
The UK Financial Conduct Authority’s (FCA) long-awaited anti-greenwashing rule came into effect in May 2024 and forms part of the wider Sustainability Disclosure Requirements regime. The FCA’s naming and marketing rules, which come into force in December 2024, ensure that sustainability-related terms like “ESG”, “green”, and “impact” are used appropriately.
Meanwhile, the UK Government is expected to endorse the much-anticipated UK Sustainability Disclosure Standards (SDS), which aim to standardise ESG reporting, in the first quarter of 2025. The Government also still expects to consult in due course on the proposed UK Green Taxonomy. Elsewhere, the Transition Plan Taskforce (TPT), which has been working to develop a gold standard for climate transition plans, released its sector-specific guidance in April 2024, complementing the TPT Disclosure Framework that was published in October 2023.
While climate change remains at the top of the ESG agenda, there has been an increasing focus on nature and biodiversity risks as an important area in its own right. The Taskforce on Nature-Related Financial Disclosures (TNFD)’s framework was finalised in September 2023 and is expected to become the global standard for reporting on nature and biodiversity.
At the wider European level, as of January 2024, EU regulations now require large companies to disclose scope 3 emissions, impacting UK-based companies linked to EU supply chains.
Without a doubt, ESG remains a top priority for businesses in the UK across all sectors, as scrutiny from regulators, investors and strategic litigants will continue, and in this context, law firms are expanding their expertise to meet the demand for specialist advice. As sustainability issues permeate a multitude of legal areas, law firms are realising the competitive edge of cross-practice ESG expertise. Multi-disciplinary teams offering integrated solutions are becoming increasingly attractive to clients seeking comprehensive ESG guidance.
2024 also saw a greater emphasis on technology, and greater involvement of AI. With the collection of ESG information being highly complex, ESG monitoring tools can offer better and more accessible data. Rapidly evolving AI tools can also be deployed for sustainability efforts, however, at the same time posing sustainability risks, such as the huge amounts of energy consumed by data centres. Law firms too are expanding their ESG services by developing and offering legal tech solutions.
Beyond their client services, firms in the UK themselves are increasingly aligning with sustainability goals, both in terms of operational emissions and ethical responsibilities. Various domestic initiatives support the sector in its net zero efforts, including the Legal Sustainability Alliance, and the Legal Charter 1.5, launched by a group of UK law firms in 2023. The UK’s Law Society published a climate change resolution outlining the role solicitors can play in addressing the climate crisis. While there is a growing awareness around advised emissions (generated by the type of work a firm advises on), firms with truly climate-conscious practices remain rare.
More supply chain scrutiny and transparency has been particular focus in 2024. Pressure is mounting for companies, including law firms, to be transparent and take more ethical approaches to not only their operations but also their supply chain relationships. Firms with more advanced internal sustainability programmes have now been looking more closely at their scope 3 emissions (in connection with their supply chains).
Our guide showcases key UK law firms leading the way in sustainability, reflecting the evolving landscape as ESG and the green transition continued to reshape the market in 2024.
