Climate Change Risks
Introduction
The Law Society has taken an uncharacteristically proactive step by issuing guidance to its members on advising their clients on the risks of climate change.
It covers various aspects, including aligning business practices with transitioning to a net-zero economy and recognising the significance of climate change risks in providing client advice.While the guidance does not represent the regulatory position of the Solicitors Regulation Authority, its endorsement by the Law Society marks an important milestone in tackling climate-related challenges within the legal profession.
Industry recognising the impact of climate change
The guidance aligns with a broader trend among professional bodies, which increasingly acknowledge the impact of climate risks on their respective industries.
Noteworthy examples include the Institute of Chartered Accountants in England and Wales, the Financial Reporting Council, and the Royal Institution of Chartered Surveyors, all developing guidance to address climate change.
Law firms and climate change
The Law Society's guidance highlights the complex challenges of climate change for law firms. It introduces the concept of advised emissions, highlighting that emissions associated with what law firms advise on often surpass those from their own activities.
Firms are urged to understand and influence the reduction of advised emissions while setting broader targets in line with the Paris Agreement on Climate Change 2015. This involves understanding clients' climate change strategies, providing advice on climate-related risks and opportunities, assisting clients in emission reduction and transition planning, and evaluating the compatibility of instructions with a firm's climate change commitments.
Professional duties and climate change risks
The guidance stresses how climate risks impact the profession's duty of care. It emphasises that solicitors' duty of care may extend beyond the immediate scope of instructions, to consider the impact of climate risk on their clients and their transactions. Moreover, solicitors may have a duty to inform clients about legal risks stemming from climate change, potentially affecting professional indemnity insurance and their retainers.
These considerations underscore the need for solicitors to remain informed and adapt their practices effectively.
Conclusion
The guidance indicates a significant development for the legal profession. Moving forwards, as specific guidance on advising clients about climate risks is expected, this issue will continue to shape the legal sector. While it presents opportunities, it also poses heightened risks, requiring lawyers to navigate complex legal, ethical, and practical challenges associated with climate change.
The legal profession's response to climate change is crucial in promoting sustainable practices, safeguarding clients, and contributing to the global transition towards a net-zero economy.
