Law firms and Net Zero – Advisors and leaders?

The race to reduce carbon emissions remains at the top of the global agenda, particularly with the recent hosting of COP26 in Glasgow, which saw broad commitments from UN member states to reach net zero in emissions within the next 30 to 50 years. Previous holdouts including Russia, China, and India joined the global movement, with the focus now turning to how governments, and perhaps more crucially, the private sector, can sharply reduce their carbon footprints.

The role of law firms in this process is, somewhat obviously, traditionally that of a legal advisor, with corporate governance, energy, and tech lawyers, among others, advising their clients on matters such as energy transition schemes, renewable infrastructure projects, and internal ESG commitments. Crucial developments such as the EU Green Deal have placed new pressures on businesses to comply, a panacea for corporate governance and regulatory compliance teams advising global blue-chip clients.

Even more indirectly, we see firms play a role – as advisors to impact funds investing in green infrastructure, or activist shareholders seeking to divest from fossil fuels, as well as representatives of climate protesters facing criminal charges.

Brussels-based White & Case partner Jacquelyn MacLennan explains: “Public companies, most visibly, are facing pressure from institutional investors who are increasingly engaging with them via ‘stewardship teams’ that are urging them to adopt more sophisticated due diligence, disclosure and management of ESG risks in their operations and supply chains.”

Elaborating on the changing role of lawyers amidst these new pressures, MacLennan says: “Environmental activists have been using climate change litigation as a means of putting pressure on governments and corporates to meet emission reduction goals. Lawyers are increasingly called upon to advise on these corporate governance and litigation risks.”

These pressures have resulted in a change in attitude at board level, according to Darren Walsh, head of power and utilities at DWF: “What’s really important is the buy-in we’re now seeing from companies. Six or seven years ago we would suggest renewable energy sources to clients and they just wouldn’t be interested. Now, even in the last six months there is much more of a buy-in from boards, CEOs, and CFOs.”

Similarly, leading law firms and their partners have also contributed to thought leadership on the topic of climate change mitigation, both in the form of opinion and as advisors to intergovernmental organisations dedicated to keeping climate change on the global agenda, as well as developing potential policy responses.

Law firms as climate actors

Another way to look at the role law firms play, however, is to examine their own contribution to climate change. Law firms across Europe and globally employ millions of employees, and many have multiple international offices and significant global footprints, not to mention the vast amounts of paper utilised in briefs and bundles. While curtailed by the pandemic, international legal work has necessitated the heavy use of air travel for client negotiations, conferences, and even job interviews.

To put it simply: law firms are polluters too. Like all major companies, their day-to-day activities create carbon emissions, in some cases more so than other businesses, or at least in ways other businesses do not. As the global private sector looks to how it can ‘go green’, the legal industry finds itself under the spotlight.

For the first time, Legal Business’s LB100 requested information on carbon emissions from City-based firms, sorting the firms’ responses into a table calculated via dividing total emissions by headcount.

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As noted above, firms with larger global presences and headcounts have a higher environmental impact than others. Peter Duff, chair of Shoosmiths, a national firm who feature among many City-only operations in the second-bottom category, speaks on the role firms can play, and the importance of setting an example, adding:

“We believe that with collective action and visible leadership from the global business community on climate change, a greater, faster reduction of carbon can happen. We have found that sharing the knowledge we’ve accrued on our journey towards net zero has helped clients and contacts’ businesses, and we would encourage other firms to have these conversations to share best practice.”

At international operators such as White & Case, efforts are also being made. Per MacLennan: “Law firms such as White & Case are undertaking the same efforts to reduce our carbon footprint as our clients. For example, we have conducted multiple GHG emissions assessments [and] instituted a global Environmental Management System of some 60 actions that we expect each of our offices worldwide to adopt.”

These assessments have proven fruitful, translating into direct action, as MacLennan points out. “So far about a third of our electricity is powered by renewable energy”, she reveals, demonstrating the very similar pressures law firms face to their corporate clients, resulting in efforts to directly reduce emissions.

Law firms and ESG

The rise of the ESG agenda within businesses does not exclude law firms, which face new pressures to meet internal sustainability targets, both internally and externally. One firm taking the lead in this space is listed firm DWF, which faces unique pressures as a public company.

Darren Walsh and Kirsty Rogers, who administers the firm’s ESG programme, discuss the firm’s work as advisors and its obligations as a listed law firm.

Rogers explains: “As a listed company, we are required to report and are rated on ESG requirements. We have also committed to the SBTi and keeping emissions under 1.5 degrees by 2030, and to be net zero by 2050. It’s a journey lots of firms aren’t on yet – because they don’t have to be. We do and we want to be.”

DWF has a UK-wide and global presence, which creates difficulties further detailed by Rogers, with office rental contracts cited as a key issue: “We’re adopting a science-based approach, looking at emissions from our global offices. This includes looking at leases, and areas where there may be a break or opportunity to revise the energy supply to improve emissions. Manchester is already 100% renewable in terms of the energy we use and this is our largest office.”

For Walsh, action as a legal advisor is equally important as the work the firm does internally, both in terms of promoting action, as well as helping the firm meet reporting targets: “Working with clients on these projects isn’t just work for us, it’s genuinely important that we see positive changes as a result of what we do. It also helps us demonstrate that we’re committed to our climate and ESG targets as a public company – which we sincerely are.”

MacLennan also notes the role firms play in ESG initiatives, arguing that “ESG is also a key area of opportunity for organisations. Law firms are at the cutting edge here, developing innovative solutions in terms of the existing and evolving legal frameworks.”

Duff echoes these sentiments, expanding on Shoosmiths’ own ESG efforts: “We feel a responsibility to help make the planet a better place for future generations and have been tracking our ESG impacts since 2012. We’ve made a commitment to decarbonise our business. In January 2020 we set a target for Shoosmiths’ operations to achieve net zero status by 2025, and are proud that in November this year, our near-term science-based emissions reduction targets applicable to our entire value chain were approved by the Science Based Targets initiative”.

It is perhaps reasonable to argue that law firms themselves cannot turn the tide as far as global carbon emissions are concerned. Their role as legal advisors is ultimately limited to counsel and implementation of wider schemes, both governmental and otherwise, and their carbon footprints pale into comparison against the oil and gas, air transport, and manufacturing industries.

However, it is clear that the combined role firms can play – both their traditional one and increasingly as contributors to net zero themselves – is crucial, and one that is increasingly on the radar of firms and their leadership teams.