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Clifford Chance

Clifford Chance

Climate change

Addressing climate change is the heart of business strategy and planning

The World Economic Forum's Global Risk Report 2021 identifies risks linked to climate change as amongst the most damaging in impact and the most likely of global risks. However, while political consensus for action on climate change is building, it is not universal, and momentum for action comes increasingly from businesses or shareholders, and from local government, NGOs and consumers.

The consequences of business inaction are becoming more severe in light of regulator action, stakeholder activism, interruption to supply chains and markets, loss of reputation and the potential for litigation. However, responding to climate change also provides opportunities for opening up of new markets and new customer bases in the low carbon economy.

Businesses now need to understand how their operations affect climate change, and also how climate change may affect their operations, markets and supply chains, and to devise and implement appropriate mitigation, adaptation strategies, creating robust business models to maximise the benefits of the transition to low carbon business. 

Boards devising initiatives to address climate change need continually to adapt to evolving imperatives such as addressing their supply chain 'scope 3' emissions, and understanding how their business can contribute to a 'just transition', ensuring that the benefits available from green transition are widely shared.  They also need to consider how their business is a source of value creation or risk mitigation to their clients or customers and what role the business can take in enhancing that value and managing such risks.

Clifford Chance has a thorough understanding of climate change-related frameworks and regulation in all business sectors across multiple jurisdictions, and assists clients to mitigate climate change risk and make the most of opportunities presented by the low carbon economy. 

Our climate change services

1

Strategic advice and planning

Addressing climate change goes to the heart of business strategy and planning. Multiple factors drive the need for action to address climate change, including increasing governmental regulation, international obligations and the demands of shareholders and other stakeholders.  Increasingly businesses are under pressure to establish and implement 'net zero strategies' and green their supply chains in the face of multiple challenges from economic conditions and while also focusing on Covid recovery.

We can assist businesses with assessing and managing climate-related risks and opportunities, and devising a robust strategy for anticipating and dealing with all aspects of climate change in a world of competing pressures.

2

Carbon trading and project investment

Tightening of regulatory controls and businesses' net zero ambitions, are giving significant momentum to carbon market activity and leading to sustained increases in carbon prices.  This momentum is expected to grow significantly following COP26 as states ramp up their carbon pledges.   

With our longstanding experience in the carbon markets and offsetting, we are perfectly placed to advise clients on all aspects of regulatory and voluntary carbon market trading, regulatory requirements of trading schemes and investments into carbon reduction projects and project developers.  

3

Regulation and compliance

The burden on businesses from climate change-related regulation is growing rapidly and this trend is likely to continue. Keeping track on current rules and potential future requirements across numerous jurisdictions and at international and regional levels can be challenging for businesses. 

From operational controls, through complex reporting and disclosure requirements, to proposed carbon import mechanisms, we assist help clients keep up-to-date with all major developments in this space. We also assist them with future-proofing their organisations while helping them to navigate through the maze of compliance obligations.  

4

Investment, financing and due diligence

As the business world transitions towards a low carbon economy, and investors and financial institutions seek to green their own portfolios, dealing with climate change issues as part of transactions and projects is becoming crucial. 

We help our clients with their transition strategies as they seek to move away from carbon-heavy sectors and assets and help them implement related M&A, investment and financing  programmes. We also assist clients with their sophisticated due diligence and liability allocation needs on climate change and carbon (among other ESG issues) and related sustainable finance requirements.

5

International obligations, trade and litigation

Growing climate awareness, shareholder and investor activism and legislative and regulatory action, is leading to an increase in climate-related disputes globally. Claims are being launched on a broad range of bases, from company, securities and tort law, to consumer protection, human rights and environmental law. International treaties are also increasingly focused on climate-related issues, with international trade agreements and multilateral institutions setting new rules that affect businesses in all sectors.

We help our clients create strategies to anticipate and manage their exposure to climate-related risks and harness opportunities arising from global responses to climate change, combining our climate change expertise with our internationally respected trade, public international law, investigation and dispute resolution capabilities.

COP26 Insights

Climate change and the transition to a low carbon economy are top of the political agenda, but these issues also present a range of challenges for businesses. We are helping our clients to future-proof their businesses and identify the risks and opportunities presented by COP26.

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Recent client highlights

  • EasyJet on its carbon offset agreements associated with its announcement that it would offset the carbon from the fuel on all its flights.
  • Several listed companies and their boards on considerations regarding adopting an advisory "say on climate" shareholder vote at the AGM.
  • Numerous clients on registration under the Carbon Reduction Commitment and on other greenhouse gas and environmental reporting obligations and allowance requirements.
 
 
  • The board of directors of a major international bank on litigation risk relating to directors' duties regarding climate shareholder activist developments.
  • Various other clients on engagement with activist investors and NGOs regarding climate change disclosures, shareholder activism and climate change litigation risk.
  • A bank in connection with its report to shareholders on progress against its net zero 2050 target.

 
  • CarbonNeutral Company on the creation of an organisation to set standards for, and regulate, voluntary carbon offsetting.
  • A London listed UK bank in relation to ShareAction's proposed resolution mandating action on climate change, involving advising the board on its legal duties and potential liabilities, particularly under the UK’s Companies Act, but also bringing our knowledge of climate change activism and issues to bear to help them determine their response.