In the last couple of years in-house lawyers have been flooded with extra work, first from GDPR preparedness and then Brexit. Were it not for these two events it is likely in-house lawyers would already be focusing their minds toward climate change risks. However, despite the ongoing distraction of Brexit, climate change is a fundamental risk that in-house lawyers need to get ahead of.
Deloitte, partnering with the Institute of Chartered Accounts in England and Wales, launched their climate change video series on 13th June. Although it is aimed more at financial professionals, this is an essential introduction for anyone in business and especially in-house lawyers, who are so intimately concerned with business risk.
These videos lead you through a simple and practical process. There are 3 introductory videos which set the scene and explain the background. Then, under the heading ‘Implementation’ follows a series of 7 videos on how to start implementing change. It is these 7 videos that are the heart of the programme. Climate change can seem, at times, like a subject which is either too remote, too big or too uncertain for concrete action. The video modules tackle all these elements – showing how:
• it is immediate
• to break it down into manageable steps
• the effects are more direct for business than is currently accounted for (and will only become greater and more direct as time moves on).
Deloitte guides you through how to identify and quantify these risks, including a practical and useful articulation of the 2 types of climate risk faced by business i.e. the physical (the physical environmental effects of climate change such as how drought might affect your supply chain or flooding affecting your workforce) and the transitional (e.g. what regulatory measures may be put in place by governments that change the cost of doing business).
Understandably there is a financial lens placed on climate change by Deloitte and their partners, but these modules are equally valuable for in-house lawyers and especially those general counsel who are expected to be literate in financial risks as well as legal risks. Indeed, many of the risks noted straddle both the financial and legal arenas, for example:
- contracts becoming more onerous as climate change renders them more costly,
- supply chain breakdown,
- the inability of a workforce to be deployed due to weather related events, and
- insurance becoming more costly or unobtainable.
These concerns will all be familiar to in-house lawyers.
Themes of corporate governance and the impacts of increased shareholder activism are also threaded throughout the series echoing the in-depth analysis highlighted in the PLC Magazine article: Climate Change: turning up the heat on corporate governance.
The modules give a high-level overview of the tools that exist to help you assess and monitor climate risk and articulate the role and responsibility of the board in this process. But the real value is in their use as a free training resource for in-house lawyers and their commercial colleagues. A significant part of the role of the in-house lawyer is recognising risks and then alerting and training the business on those risks. Here is a suite of materials suitable for you to use train colleagues with only a small amount of business specific framing required. If you need to educate your board or business peers on basic climate risk and response, then Deloitte have done a significant part of the work for you.
Climate change is rocketing up the corporate agenda and the social consciousness and rightly so. There is a job to be done to translate this into a more specific legal and risk context and that job is well under way. Deloitte has made a large contribution to moving that discussion into action.