Reflections on climate service needs for the legal sector and how this may assist investment in adaptation

In June, Acclimatise, had the opportunity to present the MARCO (MArket Research for a Climate Services Observatory) legal case study at Adaptation Futures, the main biannual international conference on climate change adaptation. The conference gathers high profile academics from interdisciplinary fields, risk management and adaptation practitioners, government representatives, NGOs and businesses, among others. Our representative, Laura Canevari, introduced the results from the MARCO legal case study in the context of a session held on the third day of the conference, devoted to “Resourcing Adaptation”, and which explored different modalities to leverage investments in adaptation from public and private sources.

As noted by Laura, one of the ways to promote investment in adaptation and climate risk management is to increase companies’ understanding of the legal liabilities and reputational damages that can result from mismanaged climate risks. There is already increased attention and action on climate change driven by both legislation and litigation. In response, decision makers will need to revisit past assumptions and solicit advice on how to accurately assess, manage, and possibly disclose climate related risks to comply with legislation and fiduciary duties, as well as how to limit liabilities.

Unless and until hard and soft law are introduced that reduce ambiguity over duties, and until compliance regimes are introduced, there is likely to be an increase in contentious cases in the near term seeking to clarify the law. The legal profession will therefore be expected to update advice to ensure that clients are kept abreast of evolving climate-related liabilities in order that they can continue to act in their clients’ best interests. In a sense, in so far as lawyers supply advice and advocacy to clients on (legal) risks connected with climate change, the legal sector could itself be considered a climate service provider. There is therefore a need for better-informed lawyers across practices areas with a grasp of the sector-specific physical, transitional, and reputational risks of climate change facing their clients, and know where they may obtain reliable expert advice. On the supply side, considering the standards of proof routinely used by lawyers when presenting scientific results would assist the profession better marshal climate-related evidence.

An important factor that will affect a company’s decision to invest in adaptation is whether or not they can be held accountable and liable for climate related losses. In this context, it is important to note that advances in attribution science, increasing availability of high resolution data, and the refinement of climate models are changing the “foreseeability” of future climate impacts. This generates new grounds on which to dispute “force majeure” contractual clauses.

Improvements in science also can help clients allocating (climate-impacted) risk, reducing net risk and incentivising prudent risk management: The more foreseeable any climate related peril becomes, the less tenable will force majeure defence be and the greater the incentive to manage the risk and to invest in adaptation.

In conclusion, the results from the MARCO legal case study were warmly welcomed by the audience as they provided a clear directive for scientists on areas where information provision can be further advanced, and a clear path between the provision of climate services and investment decisions.