Carbon footprint: Lawyers should ask about climate on every transaction
In-house lawyers should train their company’s marketing and communications teams on the risks of ‘greenwashing’ as part of their responsibilities to address climate change, the Law Society has advised.
New guidance [1] said they should also use their “legal eye to edit out over-optimistic claims” about environmental benefits and “add disclaimers or context where needed”.
The society said greenwashing, or “the misrepresentation of climate change practices or impacts”, was “a legal and reputational risk that in-house counsel must guard against”.
A global review by the Competition and Markets Authority in 2021 found that 40% of online green claims were potentially misleading and regulators like the Financial Conduct Authority and Advertising Standards Authority were increasing their scrutiny.
The society said in-house lawyers should respond by reviewing public statements, marketing material and disclosures for accuracy.
It went on: “Train marketing and communications teams on the legal risks of greenwashing, while recognising that under-communicating credible progress (sometimes referred to as ‘green-hushing’) can itself mislead stakeholders.
“Even a single in-house lawyer can create a simple ‘green claims checklist’ for the comms team. Larger companies might implement a formal review process where legal must sign off on sustainability content.”
The guidance aims to support in-house lawyers in applying the society’s 2023 guidance on solicitors’ professional duties as they relate to climate change.
The “embedded nature” of the in-house solicitor created “unique” challenges, it acknowledged. “Unlike external advisers, in-house counsel must navigate climate risks within the organisations they serve, balancing legal duties against institutional pressures or business needs.”
Legal teams should be equipped to recognise how climate change impacted their organisation’s regulatory compliance, contractual obligations, litigation exposure, corporate reputation and business resilience.
Greenwashing was one of a number of risks that in-house lawyers should address, alongside the need for transparent reporting of climate-related risks, the impact of climate change on insurance and “extending climate action to the supply chain” by working with procurement.
In-house lawyers should begin by assessing the impact of climate change on their organisation and legal work.
“A sole counsel should conduct a simple review of contracts, policies and risk registers for climate references. Larger teams might perform a formal climate risk assessment with cross-department input.”
In-house lawyers were advised to integrate climate risks into existing legal briefings and regulatory updates to senior management.
“Rather than requesting standalone meetings on climate, weave climate developments into regular risk discussions – this is more effective and reflects how skilled in-house counsel typically raise emerging issues.
“Where climate risks are likely to face internal resistance, build coalitions with allies in sustainability, finance or operations before escalating to leadership.”
For “every major transaction or project”, in-house lawyers should “ask about climate”.
They should also leverage available precedent climate clauses to strengthen contracts, such as those from the Chancery Lane Project, and negotiate “for commitments on emissions, energy efficiency or environmental certifications where appropriate”.
Further, they should build climate understanding in their teams, support themselves and their colleagues to “stay curious and read broadly on climate-related developments.
“As with comparable areas such as digital and data risk, understanding climate risk is part of the ‘new normal’ for all lawyers; the aim is informed engagement rather than scientific expertise.”
Mark Evans, president of the Law Society, commented: “Climate change is reshaping the legal landscape, and reducing carbon emissions is part of responsible legal practice.
“We want to help in-house solicitors understand what this means for their organisation and those they advise and the steps that can be taken to reduce environmental impact in a practical and proportionate way.
“This guide is designed to help busy in-house solicitors identify where climate risk intersects with their existing responsibilities.”