In this Centre for Climate Engagement’s spotlight interview series explores law for climate action through the lens of a range of experts. Nigel Brook, who heads Clyde & Co’s UK reinsurance team and leads the firm’s global campaign on Resilience and Climate Change Risk, talks highs and lows of the transition to net zero.
When and why did you become interested in climate change and how do you use your career to help tackle it?
I’ve specialised in reinsurance throughout my career at global law firm Clyde & Co. My focus on climate change started about six years ago. Initially our team’s attention was on how insurance in all its forms could help make the world more resilient to climate change. Soon the focus shifted to the legal implications of climate change and the energy transition, including climate litigation. While climate lawsuits have been around for a long time, cases were beginning to surge.
Throughout, we have engaged with a wide variety of domain experts and people who are trying to make a difference, in terms of curbing emissions, improving energy efficiency and accelerating the transition; helping their organisations to adapt; and making the world more resilient to the changing climate. This rich dialogue with super-smart and engaged people (including Julie Baddeley, Chair of the Chapter Zero Board of Directors, Emily Farnworth, Director of the Centre for Climate Engagement, and others behind the Climate Governance Initiative) has given us a host of new insights and a deep appreciation of how climate risk – physical, transition and liability risk – weaves itself into just about everything.
Our core team has grown over the years and now extends across our main practice areas – insurance, energy, shipping, aviation, construction and trade. Conversations with clients and contacts in these different sectors reveal so many non-obvious or second order risks.
While the world is still not on course to achieve the goals of the Paris Agreement, I am encouraged by some developments, including the recent doubling down on renewables (partly fuelled by the energy crisis), which should make them even more competitive with fossil fuels; and the huge shift of approach we have seen in the investment sector, which is now more alive to the risks and opportunities posed by climate change and the energy transition. And we’re also seeing banks, insurers and some other business sectors increasingly using climate scenarios to assess how physical and transition risks could affect them over the next decade or more and adapting their business models accordingly.
What is the specific focus of your work in relation to climate change?
As a lawyer my main areas of focus are climate liability; climate law and regulation; and governance. To put litigation in context, there have been more than 2000 climate cases since the 1980s and well over half of those have been filed since the Paris Agreement in 2015. It’s really picking up and we are seeing all kinds of new trends. Activists and non-governmental organisations (NGOs) are increasingly resorting to the courts as a means to bring about change, for example seeking to force governments and companies to move more rapidly towards net zero. In Europe in particular, many of these cases assert duties of care to citizens based on protection of their human or constitutional rights. These have succeeded against the Dutch and German governments among others, and a case brought against the 33 signatories to the European Convention on Human Rights is scheduled to be heard in March 2023. In May 2021, a Dutch court ordered Shell to make a 45% reduction in its direct and indirect emissions worldwide by 2030. And companies in a range of sectors are being sued for alleged greenwashing in their filings or publicity.
I am also looking at regulation, such as reporting standards including the Task Force on Climate-Related Financial Disclosures (TCFD) and those imposed by regulators such as the Bank of England. My work also includes governance, including advice on how companies’ senior managers can minimise the exposure of the company and its directors to climate-related lawsuits.
One interesting case arose in California after utilities company PG&E was forced into bankruptcy protection by claims for its role in sparking fires that caused huge wildfires. Some referred to this as the first ‘climate change bankruptcy’ as wildfires on the West Coast have become more extensive and intense over recent decades. Former PG&E directors recently agreed to pay $107m to settle a lawsuit alleging their failure to react to the changing conditions led to the company’s bankruptcy.
This and other cases illustrate two broad implications of climate change and the energy transition: the past is no longer a good guide to the future; and companies’ and directors’ duties of care will become more onerous as more becomes known and knowable about the associated risks.
Why is law for climate action so important and timely?
Litigation is a blunt instrument, but when used strategically it can serve to remind companies and directors of the duties they may owe in the climate context.
Climate laws and regulations are hugely important. A good example is the UK’s Climate Act 2008, which now commits the country to achieving net zero by 2050. A Climate Change Committee offers the government guidance on how this is to be achieved in practice, sector by sector. The statute provides a basis for holding the government to account, and in July this year (in a case brought by ClientEarth) the court found that its net zero strategy did not meet obligations under the Act to produce detailed policies showing how the UK’s legally binding carbon budgets will be met. The government has in effect accepted the ruling.
Another factor to be borne in mind is that climate change is a higher priority for the generation who will be moving into positions of authority over the next decade. We might begin to see this reflected in decisions made by the next generation of judges, particularly in mainland European civil law systems, where new judges are typically younger than their counterparts in the UK.
Also, there is a growing recognition that climate change has an impact in nearly every field of law. And where a lawyer has the role of trusted adviser, it’s key for them to be aware of the impacts that climate change could have on a client’s transactions and other activities.
Which climate issue keeps you awake at night?
The pace of change at the government level. Time is rapidly running out to keep warming to something close to 1.5 degrees and, as COP27 demonstrated, there still isn’t the concerted, urgent action needed to address the problem. This is part of the “tragedy of the horizon” that Mark Carney has spoken about.
What makes you feel positive about the future?
Despite the lack of concerted action by governments, the energy transition is accelerating. Renewables are competitive with fossil fuel power generation in most countries and each doubling of capacity in solar, wind and batteries drives down the price still further. The new policy imperative of energy security seems to be fuelling more investment in these areas. And venture capital is pouring into companies developing novel technologies that address hard-to-abate sectors such as steel, aluminium, cement, air travel and heavy transportation. This could help to accelerate the journey from prototype to commercialisation.
The market cannot solve this problem by itself. Concerted political will, manifested in legislation, regulation and government finance, is still required to achieve the rapid transformation that is called for. But there are encouraging signs that capitalism is aligning with what is needed.
Contact: Nigel Brook, Clyde & Co