Climate change isn't an issue for politicians alone - it's time for businesses and the legal profession to step up

Lawyers have a significant role not just in advising on incoming energy and climate regulation, but also in developing new structures and precedents, and in advising on new aspects of corporate governance and risk management.

For decades politicians have looked to a cadre of scientists, economists, think tanks and NGOs for help in devising international and national responses to the challenges of climate change. There were relatively few opportunities for business or the legal profession to influence the debate and there seemed to be little appreciation of how remote the world of UN climate negotiations seemed to the general public and to many in business. Often seen as a political issue, in order to implement climate change policies effectively industry needs to be instructed and incentivised by a body of clear, collective regulation if it is to make the long term investments required to lower our dependency on fossil fuels and lower global carbon emission.

The scale and the uncertainties around climate change meant that regulating was never going to be easy. The global downturn has also, inevitably, diminished the vitality of the debate. Governments, to their credit, have continued to regulate but have in some cases appeared slow to appreciate the importance of commercial certainty. There has also been a tendency to underestimate the impact of regulatory tinkering on willingness to invest. Many policy initiatives have involved a considerable learning process in relation to the interaction of environmental constraints and market forces. This has included regimes for trading carbon credits, which required the elision of environmental and financial markets expertise, and schemes for reducing emissions from the built environment which have struggled with the implications of landlord - tenant arrangements.

In response to these challenges, the Legal Sector Alliance on Climate Change, an association of 270 commercial law firms, has argued publicly for effective regulation in relation to climate change and low carbon energy. In its most recent communiqué eight principles were set out that policy makers should take into account in formulating new policy and regulation, which includes recommendations relating to investment incentives and the standardisation of products and reporting standards.

There are signs that the mood is shifting towards working with business. Private sector consultation on the development of new UN mechanisms is being encouraged. COP 19 in Warsaw has been promoted as a "business COP", with Poland encouraging the UN to bridge the gap between the policies being shaped through negotiations and the role of business in implementing and financing these obligations. Lawyers can decode and help shape the debate in these areas.

Because the scientific community is in broad agreement on the reality of climate change, it is a risk that companies have to consider as a matter of good management. This makes climate change one among many factors that businesses consider in relation to new projects, transactions, or as part of their risk management and governance processes.

For most sectors climate change is an area comparable to other more traditional issues on which lawyers advise. For the energy sector and for energy intensive business, the impact of the policy response to climate change is likely to be more profound, albeit over a long timescale.  While the primary energy sources for the foreseeable future are fossil fuels, the market share for renewables continues to grow and there is an developing focus on the energy efficiency of buildings, industrial operations and products. These changes are creating new business models, additional issues in transactions and operational challenges. For these industries, lawyers have a significant role not just in advising on incoming regulation, but also in developing new structures and precedents, and in advising on new aspects of corporate governance and risk management. So as the volume of regulation relevant to climate change evolves, expect the role of lawyers to be much broader and more important.

The Legal Sector Alliance on Climate Change has set out eight principles for formulating new policy and regulation. Photograph: Getty Images.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.