Climate Change

The scientific consensus is that anthropogenic climate change is a critical long term challenge, with effects already obvious and an average global temperature rise of at least 1.5 degrees already likely. Managing down the risk of further increases will require a transition over the next thirty years to a low carbon economy. While climate change poses very real physical and transitional challenges, it will also drive significant opportunities with new markets and technologies developing as part of a gradual transition towards a lower carbon economy.

Since the Paris Climate Agreement was reached at the end of 2015, participating governments have slowly started to design and implement the policies to deliver their commitments, with the EU at the forefront of this shift. As part of this response, central banks and financial regulators have started to consider systemic financial risk associated with climate change. This is causing some central banks, particularly in Europe, to introduce new requirements for banks and insurance companies to measure and manage this exposure. EU Asset managers and funds are also being required to disclose how they integrate sustainability issues into investment decision making. The indirect effect of these changes is to require corporates to assess and articulate their own approach to these issues.

We provide clients including governments, corporates, financial institutions, funds and social enterprises with strategic advice on all these legislative, regulatory and voluntary developments relating to climate change, and the transactions and projects that flow from them.

How Linklaters can help you

Legislative, regulatory and voluntary developments (e.g. EU Climate law, Green Deal, carbon border adjustment etc)

We advise on operational and product related climate regulation (including energy efficiency, pollution abatement, the EU carbon border adjustment mechanism, and emissions trading schemes), and commercial requirements to undertake climate change assessments, deliver best available technologies and to report on GHG emissions.

Increasingly, we support our corporate clients in finding mechanisms to assess and manage their climate change impact and the carbon footprint of their supply chain and to enable them to respond to counterparty and stakeholder requirements for increased carbon efficiency and carbon disclosure.

We are one of the few law firms who have actively participated in the international climate change conferences and we continue to follow global climate policy-making closely. We have in-depth knowledge of international and European climate change law and policy and regularly advise organisations and trade associations on the opportunities and threats presented by climate change.

 

Climate and prudential regulation, activism and wider corporate governance

We advise on climate related governance (including financial product governance), risk management, and disclosure requirements under prudential regulation and voluntary standards such as those of the Taskforce on Climate Related Financial Disclosure. This includes requirements for consideration of climate in strategic planning (including scenario planning), in stress tests and in relation to capital requirements.

More broadly in relation to corporate governance and shareholder activism, we advise banks and listed companies on their governance of climate advocacy, the interaction of remuneration and climate or ESG policies, setting and reporting on climate change related targets, and climate litigation risk management. We also advise on reporting, including advice on and verification of sustainability and transparency reports, and the impact of incoming asset manager reporting obligations.

Carbon trading, offsetting and forestry and ecosystem services

We have maintained a market-leading carbon commodities practice throughout the last 15 years and many of the largest and most sophisticated players in the carbon markets come to us to structure, negotiate and close some of their most complex, innovative and important transactions. This includes advice on forestry projects and biodiversity offset structures for agriculture and related sectors and for major energy projects.

Energy transition and decarbonisation

The necessity for and the scale and pace of the energy transition has become increasingly clear to the market. With our Energy & Infrastructure practice, we advise on transactions involving traditional, transitioning and renewable technologies and systems. We have expert capability in advising on the tightening regulatory and commercial requirements applicable to fossil fuel-based activities, and the rapidly evolving regulatory and commercial landscape relevant to renewable and nuclear energy, the built environment, including smart cities and smart developments, and transport, including electrical vehicles, urban and freight transport systems and their infrastructure. We also advise on related environmental and social requirements including stakeholder engagement, and supply chain carbon and ESG performance.

Climate change litigation

Climate change is now very much on the agenda and is putting pressure on governments and businesses across the globe. Climate change litigation is increasingly being considered and brought, against both public and private bodies. We provide our clients with strategic advice on litigation risk and can also help when things go wrong, developing a strategy to respond to litigation, critical campaigns, NGO lobbying of investors and non-judicial complaints.

For more information, visit our Climate Change Litigation page.

Our key Climate Change experience

Actively participating in international climate change negotiations

  • Advising on the engagement with the Department of Energy and Climate Change on behalf of a range of clients to achieve structural change in the UK’s Renewable Obligation and an absolute increase in the value of support for offshore wind, given adverse credit markets and exchange rate movements.
  • Advising on amendments to the Climate Change Bill and helped to prepare letters to the Secretary of State for Energy and Climate Change in relation to the treatment of renewable energy for the purposes of corporate carbon reporting.

In-depth knowledge of all aspects of international climate change law and policy

  • Advising in relation to mandatory corporate reporting of greenhouse gas emissions; narrative reporting including advice on sustainability reports, and advising on the regulatory regime applicable to carbon capture and storage.
  • Advising the Equator Principles group on governance. Advising an international financial institution and several commercial banks on their sustainability standards.
  • Advising a cross sector biodiversity working group formed of mining houses, energy companies and commercial banks in relation to incoming requirements under the IFC Performance Standards 2012 on biodiversity and eco-system services.

First Clean Development Mechanisms forestry project in Africa

Advising a community-based project developer on structuring and negotiating twin transactions to sell voluntary emission reductions and Certified Emission Reductions (CERs) deriving from a ground-breaking agro-forestry project in the Democratic Republic of Congo. This is the first Clean Development Mechanisms (CDM) forestry project in Africa and the world’s first project to have successfully negotiated the relevant regulatory requirements for subdividing the project into voluntary and regulated market elements.

Energy transition and decarbonisation

  • Advising a Spanish public-private entity on its accreditation under the World Bank’s Green Climate Fund (GCF) to disburse and administer GCF funds and to implement GCF funded activities.
  • Assisting financial institutions on the topic of climate change and the energy transition and their incoming obligations to disclose their approach to ESG, management of principal adverse sustainability impacts and remuneration.

Climate change litigation

  • Advising a multinational corporation with a high carbon footprint on its exposure to climate litigation and liability risks and how best to mitigate these risks and manage stakeholders.
  • Providing a utilities company with legal and strategic advice in relation to environmental criminal investigations brought by the Environment Agency and on various corporate governance issues arising from the underlying facts.

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"ESG" in the broadest sense covers environmental, social and governance issues but consensus on details of the meaning can vary and public perceptions are changing rapidly.

Our ESG team has a robust understanding of the regulatory and policy drivers of the market and experience across a wide range of sectors and contexts. We take a holistic approach, covering a wide range of areas - from climate change and resource efficiency, human rights and community engagement, antibribery and corruption, transparency and disclosure, product governance, and risk management more generally.

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