Build Back Better: Using COVID-19 to accelerate our response to the ecological crisis

The pandemic has been described as a dress rehearsal for tackling the impacts of climate change. Businesses will need to adapt rapidly and systemically in order to mitigate the anticipated disruption and prevent further harms accumulating in relation to both. As Fiona Reynolds, CEO of the PRI Association, recently wrote: “In dealing with the current crisis, we will fail if we allow it to defer or delay our response to the overarching one.”

Given the current trajectories of biodiversity loss and global heating, building a greener economy is not an option, it is an imperative.  Businesses and private investment have a critical role to play. The clarity around what is needed is not – yet – matched by certainty around how it may be achieved. However, we are seeing accelerating momentum in the commercial and financial spheres, in the willingness to engage meaningfully with these issues. 

Greening the post-pandemic landscape

The International Energy Agency’s (“IEA”) report, Sustainable Recovery – World Energy Outlook, provides a detailed plan to create or save approximately 9 million jobs and add 1.1% in global economic growth annually over three years, whilst setting us on a path to 4.5 billion fewer tonnes of GHG emissions in 2023. The UK’s Commission on Climate Change has written that COVID-19 can be an historic turning point, and set out comprehensive advice to the government on delivering an economic recovery that accelerates the transition to a net-zero emissions economy.

It is also interesting to see some governments using COVID-19 policy nudges, such as in Canada where companies with annual revenues of over US$300 million can only receive COVID-19 economic aid if they disclose their climate impacts and commit to making environmentally sustainable decisions. Similarly, in the aviation industry, France and Austria have provided bailouts that come with environmental conditions. And this is just a year after Denmark, where climate change has become a top election issue, passed a law that could cause future governments to lose majorities for a lack of action on climate change.

There are growing calls for public sector action to create a green economy, including from over 200 leading businesses that wrote to the Prime Minister to urge the UK government to deliver a clean, inclusive and resilient recovery plan[1]. Some are questioning whether the UK government’s proposed post-pandemic measures reflect the urgency of the ecological crisis. The Chancellor’s £3 billion green economy stimulus package received mixed responses, including a letter before action from climate litigation charity, Plan B.

Corporate Leadership

With mixed messages coming from government and the twin COPs (15 for biodiversity and 26 for climate) looming, the private sector is in an excellent position to show strong leadership, and it is critical to our future planetary and economic sustainability that it does.

We need rapid and substantive investment. The IEA’s latest study on Clean Energy Innovation finds that more than a third of the cumulative CO2 emissions reductions needed to shift to a sustainable path will come from technologies currently at prototype stage. Another 40% of reductions rely on technologies not yet commercially deployed at scale. It’s not surprising that the EU has launched a new Innovation Fund, intended to allocate around €10 billion until 2030, to finance breakthrough low-carbon technologies and incentivise investment. Indeed, a 2018 report from the Global Commission on the Economy and Climate found that transitioning to a low-carbon economy could deliver a direct economic gain of US$26 trillion through to 2030, compared to ‘business as usual’.

For many businesses, the role of the private sector in tackling our ecological crisis is already clear, and the potential impacts of that crisis are becoming integrated into the boardroom agenda[2]. Good governance and risk management require that material risks from climate heating and biodiversity loss are considered by the board; this forms part of directors’ fiduciary duties and reporting obligations.

In particular, the new versions of both the UK Corporate Governance Code and the Stewardship Code now reflect the increasing importance of ESG issues for businesses, and specifically climate change. Apart from the risk of reputational damage from causing negative ecological impacts, there are trends of increasing shareholder activism on environmental issues, and developing climate litigation that, even if not immediate, may bring increased risks to business. In fact, evidence is growing that effective management of ESG factors provides a competitive edge[3].

Walking the walk

For Bates Wells, our climate and biodiversity commitments are core to our business; they are part of our journey of self-improvement as a B Corp, and a means to live our values, by joining the growing movement across the business community acting to protect the natural capital we all depend upon. Not long after Bates Wells formally recognised the Climate Emergency, we were one of more than 500 businesses in the B Corp Climate Collective to publicly commit at the COP25 conference to reaching net zero GHG emissions by 2030. We were also one of over 60 signatories to an open letter to the Prime Minister in May demanding a green recover. And we were active in the establishment of the Business Declares Network, which raises awareness of the climate emergency across the business sector and supports businesses to accelerate and amplify their responses.

We are acutely aware of our interdependence with other individuals, organisations and the natural world. We have committed to collaborating wherever practicable to share lessons – good and bad – from our journey to improve our ecological impact. This has included working extensively with our pension provider to offer a sustainable staff pension as the default option. Whilst this has been a slow process, it’s something we know others are struggling with and which is likely to gain greater attention following the launch by film director, Richard Curtis, of the Make Your Money Matter campaign.

Bates Wells has also been able to connect charitable and commercial clients with mutual interest in increasing tree cover and enhancing marshlands. We are making conscious efforts to be a positive contributor to the Scope 3 record of clients for whom we are part of their value chain, and we are demanding more from our own value chain partners. We’re also a Climate Perks accredited employer, offering additional leave to encourage more sustainable vacation travel.

Core to business

As a law firm, we seek to use what we do best to advance environmental resilience where we can, identifying opportunities to use the law either to protect or improve the environment and address the twin crises confronting us. As a profit-with-purpose business, this is central to Bates Wells’ commercial strategy. It enables us to advise our clients from a position where we are wrestling with the same challenges in trying to make a positive difference. We are invested in these issues as individuals and as a business, bringing authenticity to our advice, not merely telling our clients dispassionately what they ought to do. 

We’re currently advising a number of businesses on their plans to return to their workplaces. Interest in sustainable buildings and wellbeing is increasing, particularly in anticipation of the post-lockdown world. Implementing environmentally sustainable air conditioning systems, for example, will not only save energy but will also be essential to maintaining a healthy office environment. A wellbeing strategy will be crucial for organisations, not only to keep their people healthy but to help rebuild the confidence in coming into the building. You can read more about our thinking on this topic.

Within our impacting investing work, we’ve been advising on green investments, such as renewables and electric vehicle initiatives. We’re also working with a coalition seeking a ruling from the charity tribunal in order to gain clarity on how charities’ investments should be aligned with the interests of wider society. We see sustainable and impact investing as key aspects of building back better.

Law and regulation can be a powerful tool to create changes in behaviour, by regulating companies’ actions and deterring non-compliance, and by supporting businesses and investors to create a greener, more resilient economy. We’ve been proud to join the group of lawyers working with the Chancery Lane Project, which has published its second Climate Contract Playbook and Model Laws, aiming to create new legal norms to help move the economy towards Net Zero. And we recently convened a working group on the question ‘What is our legal strategy for the biodiversity crisis?’, to develop a roadmap for using the law to address the biodiversity crisis, tapping into needs across the environmental NGO, business, and legal sectors and exploring more open, collaborative ways of engaging.  

Build better together

Returning to the theme of interdependence, the biodiversity and climate crises are too big for any one business, or even nation, to address alone. We recognise the mutuality at the heart of our endeavours: by actively seeking to contribute to a healthier future for people and planet, we are investing in a world where we will still be able to offer legal services with the aim of delivering positive impact, and so will benefit ourselves as a result. Collaboration and speed are essential. We are increasingly having conversations with clients who are independently coming to the same conclusion, and we are thrilled for those conversations to move on to what can we do together to make a difference. 

COVID-19 could initiate the “great realisation”; a tipping point for wide scale change. We need to seize this opportunity and resist the temptation to return to old habits. We need to transform and innovate, to create opportunities for growth in sustainable markets. More than ever before, we can draw on ideas and collaboration across the business community and between the sectors. We can learn from the global pandemic, to develop strategies to build back better through a greener, resilient economy, to address the overarching ecological crisis. 

[1] For more, the We Mean Business Coalition notes that, globally, over 1,200 major global companies have called on governments to invest in climate action and build back better through a series of high-profile letters and direct advocacy.

[2] For more, the World Business Council for Sustainable Development has published SOS 1.5: The road to a resilient, zero-carbon future, a business roadmap to help companies design and implement their journeys to achieve net-zero emissions before 2050.

[3] For example, recent research by Morningstar and HSBC indicates that businesses that actively manage ESG risks could be more robust in a crisis and generally perform better in the long-term.