The Climate Year – COP, Climate Duties and Analysis for Clients
It’s the time of the year when it’s only right to reflect on what has been achieved in a world permanently dominated by climate change, as we try to reach major milestones on the road to net zero. So, as we head into the New Year with all its hope and promise, in the face of record breaking heat and an ever more pressing emergency, what have we achieved?
This year’s Conference of the Parties (COP27) was held in Egypt. 40,000 people attended the event to map the net zero route ahead (yes, I know there is irony loaded in that). A record attendance showed up from businesses, which is surely a plus as they are agents of change that are leading Governments on this fundamental issue.
There are plenty of sceptics about the annual COP roadshow/air miles fest including high-profile boycotters, like Greta Thunberg. Seen from a distance it can look like just so much talk, talk and talk with not enough action – insufficient pledges of money, plodding progress towards achieving a stable and liveable climate.
I have never attended a COP and do not plan to do so, but I know people who have done so. They seem to come back from the COP re-energised to fight the good fight for the sake of us all. COPs also succeed in keeping the climate emergency front and centre in the wider global consciousness, if only for a couple of weeks.
So, in spite of the heavy carbon footprint ; the disengagement from the local host community (that was the feedback I had from the frontline at last year’s Glasgow COP which was more like a gated event for civil servants than a connected, accessible, local experience); its slow and wearying progress and bureaucratic overload, COPs are the only show in town, so we have to make them work.
The Law Society – Climate Leadership
At a more immediate, practical,and perhaps more meaningful level in our own country, we have the earnest endeavours and leadership of The Law Society of England and Wales which is working hard to engage its membership in the ongoing climate emergency. Law firms are businesses in their own right. Each one of them has an impact on the environment and hence on the climate.
All law firms contribute greenhouse gas emissions by: heating and cooling their buildings (the built environment contributes 40% of global emissions); using Wi-Fi and digital equipment (the digital economy contributes 4% of global emissions); not to mention travelling to offices and to see clients and the impacts which come through the supply chains that provide paper, food and other products.
It is not possible to manage these environmental impacts without firstly measuring them, so law firms that are taking this seriously are setting specific, numeric, short, medium and long term targets to get to net zero.
Forward-thinking law firms are mindful of the risks as well as the enormous opportunities presented by climate change. Bill Gates has described tackling the climate emergency as the biggest economic opportunity of the century.
He is probably right – and lawyers, of course, have a key to play in helping their clients to unlock commercial opportunities such as investments in climate tech, as well as advising their clients on how best to comply with an ever increasing number of laws relating to climate impacts, climate reporting, climate litigation and greenwashing around climate.
For its part, The Law Society has worked very hard throughout 2022 to develop practical climate guidance for solicitors in the form of an overarching practice note for climate conscious law firms.
This work was foreshadowed by its impressive and bold Climate Change Resolution in October 2021 which signalled to the Society’s 160,000 members that climate guidance was on its way. The new practice note is expected to be approved early in 2023. It will be a very important development which will send a clear message to solicitors that we have a key role to play in the fight against climate change.
Climate Legal Duties
Law firms also have climate legal duties and responsibilities which reinforce the need for all of us to engage with the climate emergency.
I had the pleasure of instructing Stephen Tromans KC in the summer to advise whether real estate lawyers have a duty of care to warn their residential and commercial clients about the principal physical impact that climate change is having and will increasingly have on UK land and buildings. See: In the matter of Conveyancers’ Duty of Care to Advise Clients about Climate Risk and How to Discharge Such Duty, July 2022 (‘the Groundsure Advice”).
After reviewing the measures that the Bank of England and the PRA are taking to require banks to stress test their lending portfolios against climate risks and considering relevant case law, Stephen concluded real estate lawyers have a climate duty.
Whilst Stephen’s advice was provided for environmental data authority, Groundsure, he made it clear that he is not endorsing any specific climate search or climate data product. Nevertheless, as the U.K.’s leading environmental law practitioner, Stephen’s advice should not be ignored.
The key points in Stephen’s advice are as follows:
- Solicitors and licenced conveyancers owe a duty to clients to provide warning and advice as to risks which they are or should be aware of and which may adversely affect the property being purchased. This is part of the general duty to exercise reasonable care and skill in conducting their retainer.
- Climate change impacts are set to worsen in scale and frequency in the coming years, and may result in costs and damage to property, devaluation of property, and at worst complete loss of property and associated risk to life.
- The conveyancer’s duty depends on the nature and sophistication of the client. It will be higher for residential clients and lower for experienced commercial clients. For commercial clients generally the key principles apply and would be followed by prudent conveyancers.
- The attitude of lenders to climate change risks is especially important. Conveyancers acting for lenders owe a duty to pass on to them information which may affect their security. If the lender requires an assessment of climate change risk in the letter of instruction this is a contractual responsibility for conveyancers.
- Climate risks are much more likely to be apparent to a conveyancer than to a lay client. A conveyancer should be aware of these risks and should as part of their retainer take steps to warn their clients and advise on steps to respond to the risk.
- The emergence of tools such as Groundsure’s ClimateIndex™ is a very important development. It means that there is a clear practical step which the conveyancer can advise their client to take in respect of such risks.
- Conveyancers should make use of the commercial tools which are available. The conveyancer’s duty is to undertake such environmental searches including available climate analysis for the client and communicating the results and their implications to clients in the Report on Title.
- Failure by the conveyancer to follow these practices may result in damages claims for professional negligence, increased insurance premiums, and possible reputational damage.
- Conveyancers can exclude matters from the retainer, but this would be a very unattractive course to take for climate risk. The client’s fully informed consent would be required. That would necessitate a full and clear explanation of climate risk, including physical damage, possible future risks on insurance, acceptability of the property as lending security, and effects on market value.
Not every lawyer will welcome this advice, no matter how clear, practical and prudent it might be. It is entirely possible that not every lawyer will believe that climate change is happening, although the science underpinning it is accepted by more than 99% of the world’s scientists.
Making Climate Advice to Clients Work
Overstretched residential conveyancers may, perhaps understandably, regard any additional legal responsibility as presenting too much of a burden – not because having to advise clients about climate risk impact is a major task in itself.
Indeed, as these are already included in Groundsure’s key residential and commercial environmental search reports at no extra cost (which the vast majority of property lawyers already include in their search packs) and are now backed by specially developed climate clauses to communicate to clients, the burden is not significant.
Some will say that lawyers are not climate experts and that clients should turn to their surveyors and environmental consultants for advice on such matters. The short answer to this – it is likely to be only a matter of time before all property professionals are regarded in an analogous way to conveyancers as owing a duty of care to warn their clients about climate impacts.
Whilst Stephen Tromans’ advice was focused solely on real estate lawyers and licenced conveyancers in England and Wales, the jurisprudence that underpins it can be considered to apply to other professional advisors, such as surveyors, valuers, environmental consultants, actuaries, accountants, architects, risk managers and property insurance brokers. The duty to warn is a shared responsibility – not solely one to be borne by solicitors.
These considerations are all noted, but society is not going to extricate itself from the climate emergency without making changes. As lawyers, we cannot simply act as if the climate emergency is something that happens to other people and has nothing to do with us. Just like everyone else, we are part of the problem – whether it’s from the greenhouse gases which our firms generate, or in relation to some of the work that some of us do for fossil fuel companies – but we are also a key part of the solution because we can exert our influence with our clients and our firms in a positive way.
In my previous blogs, I have demonstrated that the risks to which land and buildings are exposed are increasing due to the climate crisis will have real and significant repercussions for millions of property owners across the UK.
Lawyers are not environmental or climate scientists, but that does not mean that we can leave our clients high and dry to draw their own conclusions about these potentially very severe risks.
Solicitors have a professional duty of care to advise clients about climate risk. Prudent lawyers will be making their New Year’s Resolution to follow the Law Society’s lead and invest in climate know-how, resources and training in 2023, making best use of the climate risk analysis that it is available.
For more information on how ClimateIndex can help conveyancers and property lawyers right now to support their duty of care to advise clients on forward climate risks, visit our microsite, call us on 01273 257 755 or email firstname.lastname@example.org
About Stephen Sykes:
Stephen is a leading environmental and insurance lawyer, specialising in mitigating ESG liabilities for corporates, lenders and public sector bodies.
He is a specialist in ESG, contaminated land and environmental insurance and has co-founded several successful ventures in the environmental data, insurance and consulting sectors.
He is managing partner of The Sykes Partnership LLP and is an experienced chair and Non-Executive Director of environmental organisations. He is Past Chair of the UK Environmental Law Association (UKELA) between 2015-17 and has just been appointed to the City of London Law Society’s new ESG Committee.
Dec 15, 2022