Concerns around climate change, environment and natural resources have never been higher on the legal, political or corporate agenda. Business-as-usual is no longer a viable option. Any sustainability or ESG analysis must consider these fundamental issues.
Climate change, environment and resources
Climate change will be the challenge of our generation. To transition our economy, based around fossil fuels and carbon since the Industrial Revolution, presents a significant test of resolve for industry and wider society. The effects of climate change are often less visible than other environmental impacts, but will be experienced most keenly by future generations without dramatic societal changes to slow global temperature rises. A multi-faceted approach by industry, investors and governments is required, and businesses should be looking to move beyond good intentions and start to achieve real results. As governments set ambitious climate targets, we anticipate a move from the current transparency and reporting regimes to more demanding statutory restrictions and obligations.
Getting to grips with the myriad of environmental laws and regulations in so many areas, from contaminated land and waste, chemicals and plastics, to air and water quality, is a challenge for any business. Although not currently dominating the headlines in the same way as climate change or natural resource concerns, failure adequately to address these environmental risks can result in significant liability and reputational damage. Increasingly stringent substance restrictions, as well as higher standards under environmental permitting, can render an industrial process or product redundant, so it is important to keep on top of legal and regulatory developments on the horizon.
The last two decades have seen an increasing number of climate change litigations globally, with a notable increase in cases in the last few years. "Climate change litigation" can refer to a broad spectrum of cases, including cases brought in relation to planning and permitting, breaches by states and governments of their carbon emission commitments and liability of private companies. It remains to be seen how the fall-out from the COVID-19 crisis will impact climate change litigation. Notably in the UK, the UK Government has recently received a pre-action protocol letter challenging the legality of its COVID-19 economic recovery plan, alleging unlawful allocation of Government and Bank of England funds.
All global economies share an unshakable reliance on natural resources. Global population growth is continuing to drive more intensive industrial and agricultural operations, often in countries with few regulatory checks and balances. The sustainable development agenda requires us to manage our use of the rapidly-diminishing supply of natural resources to preserve them for future generations and developing countries, and to mitigate and where possible, reverse the environmental damage caused by the depletion of those resources.