Sustainability and the Commercial Legal Profession: Success Story or Window-Dressing?
Rising temperatures, environmental degradation, natural disasters, conflict, terrorism, economic disruption, food and water insecurity: these make up merely a fraction of the damaging and far-reaching consequences of the climate crisis.The topic once again dominates the global stage with the impending COP27 Summit set to take place on the 6th of November 2022. The Paris Agreement of 2015 set a global target to limit global warming to 1.5 degrees Celsius compared to pre-industrial levels; however, the 1.1 degree threshold has already been surpassed. It has therefore become more explicit than ever that the ‘business as usual’ approach must be swiftly abandoned, with the commercial legal profession projected to play a fundamental role in furthering sustainability initiatives, ESG policies and Net Zero pledges.
In light of the urgency of the climate crisis, the term ‘sustainability’ itself now broadly permeates the legal industry as a whole, with the large majority of law firms now consciously addressing and publicising their environmental impacts and developing sustainable business practices. The commercial legal profession is in a prime position to advise companies over their green business ventures. This crucial role of law firms was explored in a Law Society report which stated that ‘Lawyers will be asked to help their clients identify, avoid and manage physical, liability and transition risks linked to climate change’ (Future Worlds 2050 project).
This statement has evidently materialised, with one third of UK’s largest companies having now committed to Net Zero by the year 2030. The commercial legal industry is extensively involved in advising companies in delivering Net Zero legal solutions by providing expertise on policies, regulation, strategies and projects that must be adopted in reaching their targets. The role of law firms is therefore instrumental, especially considering the fact that just 100 companies are responsible for 71% of global greenhouse gas emissions (Acciona, 2021).
With the climate crisis has come a rise in ESG investments; put simply, ESG considerations involve using environmental, social and governance factors as an indicator of sustainability. In recent years, these factors have been placed on a pedestal when companies decide who to work with and where to invest - in fact, over 85% of investors are interested in sustainable investments (Morgan Stanley 2019 Sustainable Signals survey). This once again opens doors for the commercial legal industry, since they are well-placed to capitalise upon these trends - the increase in green business ventures and ESG investments will inevitably result in an increase in the demand for legal representation.
In parallel, it is imperative to address the paradoxical role of the commercial legal sector in the climate crisis. Despite their evident push on sustainability initiatives, they remain significantly involved in the fossil fuel industry. In other words, numerous elite law firms are lobbying for sustainable business practices whilst profiting from an industry that dominates in the production of carbon dioxide. This raises the question of whether these initiatives are merely a façade - the commercial profession, by placing sustainability at the forefront of the legal industry, attempts to deflect the scrutiny they face for representing their fossil fuel clients. For example, Allen & Overy have engaged in fossil fuel transactions worth $125bn over the last five years whilst also stating that they have done “more renewables work than any other law firm in the world by most key measures” (A&O Press Release, 2021).
One of the primary purposes of the Paris Agreement is to reach carbon neutrality. However, the extent of overlap between the legal and fossil fuel industries means that the sustainability initiatives taken do not sufficiently equate to the magnitude of the climate crisis, and do little to achieve this ‘neutrality’.
At its surface, sustainability, in the wake of the climate crisis, is presented as the primary focus of numerous elite law firms. However, delving deeper exposes the harsh reality that the commercial legal sector remains heavily interlinked with fossil fuels. Progress in this area is a futile endeavour until the concept of economic prosperity is decoupled from environmental degradation; until then, sustainability initiatives will remain as mere window-dressing rather than a success story.