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Clifford Chance

Clifford Chance
Climate Change<br />

Climate Change

Addressing climate change is the heart of business strategy and planning

The World Economic Forum's Global Risk Report 2023 identifies global risks linked to climate change as among the most likely to be severe over both short term and long term periods. However, while political consensus for action on climate change is building, it is not universal, and has suffered from economic pressures and political instability and intransigence. 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

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 transparently establish, implement and publicly report on their 'net zero transition strategies' and green their supply chains in the face of multiple challenges from economic conditions and while also focusing on economic recovery and growth.

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.

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 as states ramp up their carbon pledges, as the Paris Agreement market mechanisms begin to take shape, and as efforts to develop the voluntary markets and improve their quality and integrity bear fruit.  

With our longstanding experience in the carbon markets and offsetting/climate contribution claims, 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 and establishment of carbon registries. We are also at the forefront of development of nature-based solutions markets.

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 carbon import tax 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. 

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 disclosure requirements.

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.

Recent client highlights

  • Coalition for Rainforest Nations Secretariat ("CfRN"), the originator of the Article 5 REDD+ mechanism on creation of a new carbon market unit and platform for trading sovereign REDD+ activities aligning to Article 6.2 (ongoing).
  • SMBC Aviation Capital on their investment into an improved cookstove project in Burkina Faso.
  • Several listed companies and their boards on considerations regarding adopting an advisory "say on climate" shareholder vote at the AGM.
  • Biocare Projects on its long-term carbon removal project with ASX-listed timber company Kiland Limited.
  • Sarawak Government on legislative changes to enable the ownership of, and rights to trade in, carbon stocks and carbon credits in the State of Sarawak, Malaysia
  • World first plastic and carbon credit-linked bond: Advised Citigroup Global Markets Limited as arranger of the first bond for which interest amounts are linked to, and contingent upon, the generation of plastic waste collection credits and plastic waste recycling credits, issued by the IBRD. A portion of interest on the bond is also linked to, and contingent upon, the generation of VCUs.
  • European Bank for Reconstruction and Development on an unsecured loan of up to €40 million to the Agence Nationale des Ports, to finance a package of construction and improvement works to improve the climate resilience of selected Moroccan ports
  • 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 number of companies in the power, finance, manufacturing / engineering and data/information sectors on their obligations relating to disclosure of environmental, climate change and carbon disclosure in their annual reporting
  • A bank in connection with its report to shareholders on progress against its net zero 2050 target.
  • City of London Corporation in collaborating on a paper (with the UK Voluntary Carbon Market Forum) titled "Enabling the Voluntary Carbon Market in the context of the Paris Agreement".
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