Guest post by Humzah Khan, programme manager at The Chancery Lane Project
Khan: Pressing need for education within legal community
Lawyers have a unique and pivotal role in the global push toward decarbonisation. As businesses face increasing pressure to meet voluntary climate targets, legal professionals are stepping up to help organisations integrate sustainability into everyday operations.
Companies like Vodafone and NatWest have embedded climate clauses into their contracts to foster sustainable business practices and hold suppliers accountable for reducing emissions. Lawyers are actively shaping the global economy’s transition to net zero by using contracts as tools to bolster climate goals.
Adopting climate clauses
Climate clauses reconfigure business contracts to ensure sustainability goals are woven into their agreements. These clauses range in ambition, depending on the organisation’s specific climate targets, industry, and jurisdiction.
At the lower end of the scale, ‘light green’ clauses are an entry point, introducing climate considerations into contracts and setting the stage for more ambitious commitments. These clauses open the conversation on sustainability and help to align early business decisions with climate goals.
Over time, companies can transition to ‘dark green’ clauses, which include more stringent and enforceable decarbonisation measures.
Adopting climate clauses can bring initial costs, but the long-term benefits far outweigh the short-term expenses. While companies may be hesitant to take on added costs, failing to act now could lead to much higher costs in the future.
Climate-related disruptions—such as extreme weather events—could severely affect supply chains, leading to significant financial losses. Moreover, businesses that delay adopting climate clauses risk reputational damage and legal liability.
As climate awareness grows, stakeholders such as shareholders and consumers are holding companies accountable for their sustainability practices.
The legal profession’s role in decarbonisation
Like back-end developers, lawyers build the frameworks that underpin business operations. The contracts and legal documents they create have the potential to either hinder or support climate goals.
Though often overlooked, these documents inherently contain carbon, contributing to global warming. Legal professionals can, and should, use their influence to align commercial activities with climate objectives.
Contracts, in particular, offer a significant opportunity. Since carbon emissions are often embedded in long-term agreements, there’s an opportunity to introduce legally binding decarbonisation commitments. By incorporating climate clauses, businesses can translate their voluntary climate pledges into enforceable emission reduction targets.
Bridging the climate clause knowledge gap
Despite the growing significance of climate clauses, many organisations have limited knowledge about their use. The legal profession, in particular, faces a learning curve, with many lawyers still unaware of how their work impacts climate outcomes.
Concepts such as scope 3 emissions and carbon budgets are not yet well understood, leading to a disconnect between legal practices and climate goals.
To close this gap, there is a pressing need for education and professional development on climate issues within the legal community. Lawyers who fail to upskill risk falling behind, unable to offer clients the advice needed to navigate the complexities of climate-related risks and opportunities.
Practical steps for businesses
Climate clauses are crucial for organisations embedding climate objectives into their legal agreements. To implement them effectively, strong collaboration across legal, leadership, and sustainability teams is essential to align business practices with climate goals.
There is no one-size-fits-all approach to climate clauses; businesses can start with lighter clauses to initiate discussions and pave the way for more ambitious decarbonisation strategies.
When assessing the cost of implementing climate clauses, organisations should weigh the long-term risks of inaction – such as supply chain disruptions, liability, and reputational harm – against the immediate costs of action.
As the link between legal work and climate issues becomes clearer, lawyers must quickly adapt and enhance their skills to provide relevant advice on climate risks and opportunities.
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