Net Zero Legal Solutions

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The latest carbon neutrality laws can be found around the world: HFI Net Zero Legal Solutions (N-ZELS) is hosting next week`s Energy Export Conference led by EIC (Energy Industries Council). This is the start of a series of initiatives focused on carbon neutrality this summer, culminating at the GASTECH 2021 conference, which will take place in Dubai in September. An example of this is the adaptation of progress on climate change and other ethical issues such as inequality to business strategy. The role of the legal function in this context is becoming much more holistic. Companies need the help of their legal teams to put in place the necessary risk management systems, practices and procedures. The task is to anticipate undesirable risks by ensuring that current and other ESG strategies align with the direction of current, evolving and future regulations in a way that benefits society and shareholders. Corporate lawyers are the conscience of their company and are particularly capable of influencing the board of directors and driving strategic change. Therefore, an issue like carbon neutrality, defined by social conscience, needs the influence of the in-house lawyer as well as the skills to carry out the practical aspects of policy integration. The calculation of carbon neutrality is ill-defined, unregulated and complex. Companies that make net zero statements such as « We will be net zero by 2030 » risk being accused of misleading consumers.

Adopting net-zero emissions laws is not only important for public sector actors. The adoption of net-zero emissions laws also serves as a signalling mechanism for other actors and, if properly implemented, can create an enabling environment for other net-zero initiatives in a non-legal context. In addition, the increasing prevalence of net-zero emissions laws allows for greater knowledge sharing with actors with less capacity to implement such laws, and also increases transparency and accountability regarding emissions targets and reporting. It is essential that all lawyers have knowledge about climate, both legally and scientifically. NZLA members have access to tools to build the capacity of their lawyers independently of the practice group. Federal courts have found it misleading to directly or implicitly distort that a product, packaging or service provides a general environmental benefit, and ESG claims, including carbon neutrality, may fall within this scope. But it`s another thing for a company to make ESG statements greater than net zero or otherwise mislead customers. We caution companies not to make blanket environmental claims because « it is highly unlikely that marketers will be able to justify all reasonable interpretations of these claims, » in accordance with the Federal Trade Commission`s standard for environmental claims. Federal courts have ruled that it is misleading to directly or implicitly distort that a product, packaging or service provides a general environmental benefit, and ESG claims, including carbon neutrality, may fall within this scope. Everyone will be affected. Net Zero will be the UK`s biggest political and legal engine for decades to come. It affects any public or private entity that operates or intends to do business in the United Kingdom, as well as any resident of the United Kingdom.

In addition, legal departments can use their purchasing power to prioritize the sustainability of the legal services they purchase by hiring service providers they work with to have strong and verifiable environmental commitments. This will require legal departments to go beyond traditional objectives to minimize costs and be willing to support more strategic objectives. The advisory community has begun to discuss these issues, drawing on innovative legal solutions related to benefit-sharing, as well as many years of experience in blended finance in the context of development capital. Well-known structures such as funds and other pooling vehicles can help build scale and reach investors. In terms of guidance and incentives, the impact investing industry can bring its experience in setting, measuring and pursuing non-financial objectives. All this must be flexibly integrated into smart legal solutions and sophisticated capital structures that help private investors support the development of climate-neutral urban centres. We see our role as articulating and then mitigating what is now referred to as « carbon asset risk » for a company, which includes a net-zero commercial claim. Carbon neutrality is not required by law, but in-house counsel are still expected to play an important leadership role. How does legal expertise support the transition? Take contracts, for example – these are bespoke documents with specific commitments and conditions that can break down the huge puzzle of achieving carbon neutrality into enforceable elements, such as corporate social responsibility (CSR) policy clauses or mandatory environmental reporting from suppliers and other stakeholders. Net-zero emissions laws face the twin challenges of coherence and adoption.

Any net-zero legislation must be based on credible and science-based targets to ensure that it is a comprehensive target and consistent with global net-zero emissions targets at all levels. Second, there is a need to prioritize net-zero emissions legislation at all levels, from cities to states. Increased knowledge sharing on legal best practices and continued pressure on legislators from citizens and civil society will ensure that the net-zero emissions agenda is integrated into a legal and sustained context. Increase the flexibility of local planning frameworks to enable greater granularity in adapting low-carbon energy solutions to local contexts. In addition, carbon neutrality laws can be improved through initiatives such as promoting the deployment of smart and responsive energy meters and grids, improving the availability and digitization of open source energy data to enable increased digital innovation, and prudently developing and managing tradable and robust carbon credits to account for residual emissions in the net-zero system.