The reality is that the business world has to adapt to new ways of doing business and move away from what is referred to as a ‘business-as-usual’ approach. This requires an updating of the rule of law in terms of business, if society is to achieve its climate-change aims, set out in the 2015 Paris Agreement. In the same year, we also saw the development of the 17 UN Sustainable Development Goals (SDGs).
These two advances are slowly having more and more impact – and there will be an update to the Paris Agreement at the UN COP26 event in Glasgow this November.
The legal community has an obligation to play its role in these changes. Lawyers can no longer avoid responsibility – or, indeed, claim lack of knowledge on these issues. There is, at the very least, an ethical obligation on lawyers to respond and show their commitment and contribution to one of the world’s greatest ongoing challenges.
Issues such as sustainability affect many areas of civil law and certainly nearly all areas of commercial law. All categories of law and contracts formulated in this area need to be changed to accommodate this issue of sustainability.
Urgent overhaul
Legal education also needs an urgent overhaul. To make its contribution, all lawyers should be educated on the pressing concern of climate change and sustainability. Business practices need to think about how they can become more sustainable – therefore law and contracts need to be updated and encourage greater sustainability.
At the very least, there should be some clauses within a contract that detail what sustainability is; how it is relevant and applied to that particular business activity; and how business activity responds to climate change.
Today, all lawyers have to pass examinations in a variety of subject areas around commercial law, such as the law of contract, company law, jurisprudence, European Union law, equity, and the law of tort. However, the problem is that there is a deficiency of teaching within these subject areas around climate change and sustainability.
A quick review of key texts used by students studying at undergraduate or postgraduate level in the area reveal little coverage of climate and/or sustainability issues. In terms of moving to qualify to practise as a solicitor or barrister, again, it is not apparent where these issues are included in the curriculum – though it should be acknowledged that these curricula are updated annually.
More books, study, learning materials, and lecture time are needed to cover climate change and sustainability issues to give students a modern legal education today. Different professions in the business world are already changing and making key investment decisions to support that change. For example, PwC announced in July 2021 that they are funding a $12 billion investment drive in staff in the area of environmental, social and governance (ESG) issues.
In addition, Goldman Sachs has announced a $750 billion programme in sustainable financing, investing, and advisory activity by 2030. Major firms recognise the need for staff expertise in this area, and that it is growing fast. These companies are another avenue for legally educated and qualified students to secure employment.
The data-driven lawyer
A key reason why change is being ushered in is that we are fast moving into a data-driven society. We in Ireland, of course, should be more familiar with the effects of this data-driven world. Some of the core group of technology companies that are driving this technology revolution are, and have had, a commercial base in Ireland for many years.
This push for data has now spread across society, with more and more data being produced on climate change and sustainability. Already, there are data-driven assessments on how society is meeting the aforementioned UN SDGs.
Today’s commercial lawyer has to engage with this explosion of data – one that is set to continue. This is what is being captured under the ESG frameworks that are on the rise in the commercial world. Increasingly, there are obligations – for accounting practices and those securing international finance – to be more transparent around reporting on risks from climate, sustainability, and waste issues in business activity.
With the advent of an increase in data on these issues, it is now unavoidable for lawyers not to engage with this data and for it to affect the advice they give to their clients.
Legal clients expect to be protected now and into the future on issues of climate and sustainability risk. For example, in five-to-ten years, it will no longer be good enough to say that legal advice given at the time (that is, today) was good, when, in fact, data was available that could have informed that advice.
In extreme cases, such as in the high-value energy sector, we see current and former executives being taken to court to answer to company strategic decision-making, as it is being claimed that they should have been aware of these risks to the company and failed to diversify investments (for example, Exxon Mobil, one of the largest multinational energy companies in the US).
Ethical ‘landmark’
It is clear that, as a legal community, we have arrived at an ethical juncture where the modern lawyer (and judge) has to embrace the winds of change resulting from climate and sustainability issues.
These issues may not all be covered within existing legislative and regulatory frameworks, but it is a substantial issue when applying the rule of law. Increasingly, in the context of climate change – through climate and energy justice frameworks – we hear of our obligation to act based on what type of planet we are leaving for future generations.
The issue of justice considerations for future generations will be a prominent feature of the UN COP26 conference, and will be the key message put forward by the climate activist Greta Thunberg. Public policy is changing in many countries on climate issues and directly influencing corporate behaviour.
Only last May, the Dutch courts stated that Shell, a major multinational Dutch company, had to comply with the Paris Agreement and contribute to the national Dutch effort, in Milieudefensie et al v Royal Dutch Shell (2021, C/09/571932/HA ZA 19-379). The major effect here is that the Dutch national courts have directly influenced a firm’s corporate strategy – and successfully so.
The modern lawyer will have to advise clients that this is the ‘ultimate interference’ and can happen. If a company is not complying with international agreements on climate and sustainability issues, there is a direct threat of action against the company itself, and even, potentially, against the directors.
To ignore such warning signs (not to mention the potential future commercial risks) from not applying data-driven climate and sustainability analysis when advising a client will probably result in being replaced as the client’s lawyer.
Next steps
For the modern commercial lawyer, climate and sustainability issues will have to become part of their own ethical framework. In order for this to happen, it will be necessary to change the relevant parts of the educational curricula for studying law at undergraduate, postgraduate and professional levels.
All types of commercial law subjects should include at least one to two teaching sessions on climate and sustainability issues. Further, there is much scope for speciality subjects in the area – in particular, if we consider the planned rise in investment in staff expertise in the area by the aforementioned major firms.
The future of our world is in a precarious and risky state, given the continued rise in carbon-dioxide emissions. All commercial activity worldwide has to be shaped to provide economies with pathways of how to achieve a transition to a low-carbon economy.
A lawyer’s obligation is to ensure that this transition will be a just one. And we can see that this just transition issue is a centrepiece of new climate legislation in Ireland – the Climate Action and Low Carbon Development (Amendment) Act 2021.
The legal community cannot continue to be behind the curve on issues of climate and sustainability. Legal educators around the country need to embrace the change and ensure that lawyers begin to lead on these issues – and they will only do so if provided more opportunity to gain that knowledge.
The future health of Ireland as a sustainable country, an economy, and a socially just society depends upon an overhaul of legal education. Climate change and sustainability are issues that are not going away, and they will continue throughout our lifetimes. The next generation of Irish lawyers needs to have climate change and sustainability as part of their in-built ethical education as lawyers.
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