ALG readies itself for action on climate change

This article was authored by journalist Lorraine Courtney and was first published by the Business Post on Sunday, 7 March 2021.

"Sustainability and the greening of businesses are in the top three items on every board of directors’ agenda at the moment,” said Ross Moore, Partner in A&L Goodbody's Energy, Infrastructure and Natural Resources group and joint lead of the firm’s Climate Action group.

“Any number of surveys out there confirm that. Depending on the nature of the business, this can include the way an organisation raises its finance – the green loan route - where banks are providing businesses with loans on the basis of them meeting certain green criteria.

“We’re seeing businesses pursuing sustainability strategies around the types of investments they make and, for example, only investing money in sustainable projects. On the retail side, we are seeing the advent of green financial products. Pensions are increasingly linked to green investments and on top of all of this, businesses are required to speak the ‘green language’ to consumers.

“There are also implications for how businesses engage with suppliers, how they run their business and their own carbon footprint. Basically, businesses must increasingly ensure that their own house is in order when it comes to sustainability and wider ESG issues.”

Customers’ expectations and demands are that companies respond to climate change, said Alan Roberts, partner in A&L Goodbody's Environmental and Planning law group and joint lead of the firm’s Climate Action group.

“For example, AIB has been at the forefront of a whole host of green products and our energy companies are increasingly selling us green energy,” he said. “Even sectors such as oil and gas that are right in the cross hairs of carbon reduction targets and measures are moving into the renewables market.”

There are very positive impacts on a company’s performance when they go green, said Roberts. “Companies that are seen as responding properly and authentically to climate action demands have greater investor demand, access to increased capital pools at more favourable terms and rates, have better engagement from employees and prospective talent and deeper customer loyalty,” he said.

A&L Goodbody has been engaging with businesses across all sectors in respect of the climate action agenda, said Moore. A huge amount of policy and legislation is on the way, ranging from EU and domestic initiatives to UN initiatives.

“If you take the European Green Deal as an example, it’s clear that no area of our economy is going to be left untouched in striving to achieve the 2050 targets. It affects everything from clean energy to biodiversity, tax, digital transformation and the built environment.”

“Much of what we are doing is around hard law advice. But we are also horizon scanning and, as companies look at what is coming down the track, we can advise on what they need to be aware of so they can strategise, be prepared and take advantage of any opportunities coming out of that.”

Laura Butler, A&L Goodbody Asset Management and Investment Funds Partner, said: “Working on the asset management and investment funds side of things means that climate change imperatives have hit us immediately.

“Transparency has always been vital for investors and recent developments like the EU Sustainable-Finance Disclosure Regulation (SFDR) forms part of a broader package of legislation being introduced by the European Commission as part of its Action Plan on Sustainable Finance.”

The SFDR is the framework upon which regulatory technical standards will be established and it outlines how the investment funds industry will need to consider the information it discloses to investors in relation to sustainability and ESG.

“This means that right across Europe, the terminology, the level and the quality of information given to investors in relation to the sustainability of potential investments opportunities is consistent,” said Butler.

“The first stage of SFDR takes effect on March 10 and we have been working closely with clients to help them to comply with that. It is a real sea change that we will see more and more of in the next couple of years.”

Roberts said: “Internationally, climate litigation has emerged strongly in the last five to ten years. We know that in the future a company’s actions now will be assessed with the benefit of hindsight and a company that takes a business as usual approach will be seen to have underestimated the risks and what is required to address climate risk.”

Moore said people in business have done a lot of soul searching over the past year. “Climate change and the global imperatives around that is a financial and business risk to companies. It needs to be prioritised as any other core business or financial risk.”

Butler said: “The political will that exists at a European level means there’s little scope to sidestep climate action now.”

Date publised: 8 March 2021