07/30/2020 - Corporate Climate Disclosures

Climate Change is Changing the Practice of Law

by Hana Vizcarra

Staff Attorney Hana Vizcarra was a panelist on the CLE Showcase panel “Climate Change and the Legal Profession: Beyond ‘Environmental Law’” held on July 30, 2020 at the American Bar Association’s 2020 Annual Meeting. This post is based on remarks she made as part of that panel. If you are an ABA Member you can attend the 2020 Virtual Annual Meeting for free and watch this and other panels on demand.


In 2019, the American Bar Association (ABA) House of Delegates adopted a resolution on climate change. The resolution urges government and the private sector to recognize their obligation to address climate action and to take action, urges Congress to enact climate change legislation and the US government to engage in international efforts to address climate change. The ABA also called on lawyers to take on climate change-related pro bono activities and to advise their clients of the risks and opportunities of climate change.

As part of its commitment to this resolution, the ABA included a panel on climate change and the practice of law at its 2020 Annual Meeting. The CLE Showcase event was moderated by Roger Martella of GE and panelists included myself, Prof. Michael Gerrard of Columbia Law, and Hilary Tompkins of Hogan Lovells. We discussed how climate change is impacting the practice of law, and not just environmental law. This post summarizes some of my remarks as part of this event.

Environmental law is interdisciplinary. One of the reasons I enjoy practicing environmental law is that it touches every part of the economy, every industry, and engages the full spectrum of lawyering skills. We work on transactions, litigate, advise on compliance and regulation, etc. We are not simply the keepers of the secrets of the Clean Water Act, Clean Air Act, NEPA, and other core environmental statutes; we are also administrative law attorneys, comfortable with torts, familiar with contract and land use law, and regularly encounter constitutional law questions.

And yet, the number of practice areas that intersect with environmental law only seem to grow, particularly when it comes to climate change. Try as we might, environmental lawyers can’t be experts in all aspects of these other areas of law. Other practitioners need to be familiar enough to recognize when and how climate change-related issues impact their work.

Climate change will affect your practice. Climate change is already impacting how we live our lives and how companies do business. And when that happens, it impacts the law.

Corporate disclosure practices are changing in the face of persistent efforts by shareholders and stakeholders to encourage more transparency on climate change risks and opportunities. As shareholders internalize the possibility of climate change impacts on the companies they invest in, they recognize climate-related information as crucial to their decisionmaking. Concern about climate change and desire for more insight into corporate strategy on the topic is no longer limited to values investors trying to get companies to do good in the world. This information now forms part of the total mix of information that investors want to consider in their analyses.

I don’t want to overstate the extent to which investors use climate-related information right now. This continues to be an evolving space but it is one that has changed rapidly in the last few years as shareholders become more knowledgeable on the issues, better understand the scope of information available to them, and have put resources towards figuring out how to integrate that information into their decisionmaking tools. Because of the malleable nature of the materiality standard in US securities law, investors’ increasing use of climate-related information can impact what the law sees as required disclosures.[1] Securities lawyers will be asked to consider these changes in investor demands and trends in corporate reporting.

Concern over climate change uncertainties goes beyond investors. It is changing how the whole financial sector evaluates its assets and what conditions are placed on companies to receive financing. Banks have announced new lending policies that restrict lending to certain types of extractive industries and are trying to better understand the scope of their own risks. Many financial institutions have shareholders pressuring them on their climate-related disclosure as well and there is increasing interest among bank regulators. The Task Force on Climate-Related Financial Disclosure recommendations released in 2017 included supplemental guidance for the financial sector about how financial entities should disclose climate risks and opportunities.

Financial regulators are already considering whether climate change poses systemic risks to the financial system. While US regulators are generally behind their European counterparts in grappling with how to address climate risks in their supervisory and regulatory capacities, they are not ignoring the issue. The CFTC is preparing a report right now on climate-related systemic risk to the financial sector for which it requested public comment. The Federal Reserve is also assessing these risks. US Federal Reserve Chair Jerome Powell said in January that the Fed has a role to play “to ensure that the financial system is resilient and robust against the risks of climate change” and is working to understand how to do so. Chairman Powell has also indicated a willingness to eventually join the Network of Central Banks and Supervisors for Greening the Financial System (NGSF) and has sent representatives to participate in NGFS meetings. The Federal Reserve Bank of San Francisco hosted a conference on climate change in 2019, commissioning a series of papers. The Executive Vice President of the Federal Reserve Bank of New York, Kevin Stiroh, delivered remarks on climate change and risk management in bank supervision at a March 4, 2020 event at Harvard Business School. Stiroh is also the co-chair of the recently established Task Force on Climate-Related Risk (TFCR) of the Basel Committee on Banking Supervision which released its first report in April. Financial regulators in the US are closely following efforts of central banks and regulators in other countries to develop stress testing and disclosure requirements.

While the energy sector gets much of the limelight when it comes to climate change impacts, many other industries are already recognizing physical and transition risks from climate change. Infrastructure development, real estate, and insurance are areas that already have had to adjust to very real climate-related impacts. Recent research calls into question the future of the 30-year mortgage in many areas of the country. The FEMA flood maps that insurers, developers, and local governments rely on for planning purposes and pricing risk don’t fully reflect expected climate risk. Some insurers and even some state governments have started to develop their own sea level rise and flooding data with more up-to-date climate science and projections.

These are just a few examples of how climate change is already impacting areas of law not strictly considered environmental.

Beyond independent financial regulators, the federal government is not currently working to integrate climate change risks into legal frameworks. The current administration instead has focused on preventing better integration of the collective scientific knowledge on climate change into federal regulatory structures. It has consistently worked to rollback existing environmental standards, with a particular emphasis on regulations designed to lessen the output of greenhouse gases. Many regulatory proposals in the last few years have incorporated legal interpretations designed to limit the federal government’s authority to regulate around climate change and environmental protections. In some instances, this administration has short circuited climate-conscious efforts in the private sector by rolling back regulations they have already complied with or voiced support for.

Even without new regulations, your area of practice will be impacted by climate change. As lawyers, we tend to focus most on new legislation and regulation. But lawyers need to be aware of how climate change is impacting their clients in other ways and how applicable legal standards may change even where new statutes or regulations have not materialized.

Companies you represent face changing risk exposures and financial outcomes. Many of our laws have legal standards that evolve as information comes to light such that courts will eventually see them differently even absent new regulation. For example, what courts consider material to an investor’s decisionmaking in securities law will shift as more investors incorporate climate change risk information into their ordinary course of business.

Climate change is already affecting a wide range of legal practices and its impacts on the law are only just beginning to be felt. In-house attorneys and outside counsel must have a grasp of how climate change will impact the businesses they work with, their supply chains, the contracts they draw up, their internal risk management and audit procedures, and board level governance.

When I was in private practice, I did not consider myself a “climate change attorney.” I was a typical environmental law practice attorney focused on individual client needs with little time to step back and consider broader trends that might eventually impact client outcomes. But each of us must start considering how broader trends related to climate change impacts the law we practice or we run the risk of these forces changing legal standards before we even notice.

As a trusted advisor, you are tasked with helping clients see these trends coming. You will need to help them understand the potential risks and liabilities associated with climate change—whether from physical impacts on their operations, changing expectations of shareholders and regulators, or evolving legal standards.

Climate change will affect your practice and environmental attorneys need your help in analyzing how it impacts your area of practice.


[1] Read more about how this is happening for climate change information in The Reasonable Investor and Climate-Related Information: Changing Expectations for Financial Disclosures, published in the February 2020 edition of the Environmental Law Reporter.